China’s Midea Group Plans Over $3 Billion Share Offering in Hong Kong, Sources Report

By Scott Murdoch and Julie Zhu

SYDNEY/HONG KONG – Midea Group, a leading Chinese home appliance manufacturer, is set to initiate a share offering in Hong Kong, aiming to raise at least $3 billion. This move is anticipated as early as Monday and would mark the largest deal in the city in over a year.

Midea is currently listed in Shenzhen, and the specifics regarding the discount offered to investors for purchasing its shares in Hong Kong are still being determined. Generally, shares in Hong Kong trade at a lower valuation compared to those listed on the mainland.

Midea Group has yet to provide a comment on this development, and the sources of this information have remained confidential. Should this listing proceed, it would be the largest share offering in Hong Kong since the nearly $1.3 billion raised by Chinese lithium battery manufacturer CALB in October 2022.

Following this news, Midea’s Shenzhen-listed shares experienced a nearly 3% decline, falling to 63.6 yuan, which is the largest drop seen in six weeks. The company holds a market capitalization of 444 billion yuan and has seen its stock rise by 23% this year.

Market analysts are optimistic that a successful large offering from a well-known company like Midea could potentially rejuvenate Hong Kong’s listing environment. So far in 2024, around $2.5 billion has been raised through initial public offerings in Hong Kong, a significant decrease compared to the $22.1 billion raised during the same period in 2021.

During the approval stage, Midea faced scrutiny from Chinese securities regulators regarding the possible effects a large offering might have on its Shenzhen share price. The company applied for the Hong Kong listing in October and did not receive approval until July.

Bank of America and China International Capital Corp are the appointed sponsors for this listing.

In light of recent market fluctuations, the China Securities Regulatory Commission has intensified oversight of domestic listings to safeguard small investors and has also tightened regulations for companies pursuing offshore funding through initial public offerings and other means.

Midea, headquartered in Foshan City, Guangdong province, produces a diverse array of home appliances, including air conditioners, refrigerators, and laundry machines. In the first half of this year, the company reported a record profit of 20.8 billion yuan, a 14.1% increase year-over-year, while its revenue surged by 10.3% to 217 billion yuan during the same timeframe.