Ruixiang chose October 8, 2019 as its listing date. This day is also the sixth anniversary of Ruixiang’s official registration, which has a very profound milestone significance.
The day before the official listing, Zhang Yida and other management communicated with investment banks such as CICC, Goldman Sachs, and Morgan Stanley on the final pricing.
"Mr. Zhang, Ruixiang has already raised the amount of funds raised to US$30 billion. There is no need to raise the issuance price again, right?"
In a conference room of the Peninsula Hotel in Hong Kong, Robert and other major investment bankers were trying to persuade Zhang Yida.
They are really worried. With a total of US$30 billion raised globally, plus the 15% from the green shoe placement, the total amount raised is as high as US$34.5 billion!
This figure is nearly US$10 billion higher than the world's largest IPO, Ali's listing on the New York Stock Exchange.
They are proud to participate in such a large IPO, and they really don't want to have a "breakout" or "failure to rise" situation.
The fundamentals of Ruixiang are indeed good. It is predicted that the revenue this year will reach 300 billion, and it will still be profitable.
But the issue price is too high, and investors feel that there is no profit or room for growth, which will undermine their confidence in stock trading.
Before Zhang Yida could speak, Lan Lan said first, "Why not raise the price? Our international placement was oversubscribed 8.5 times, with the total subscription amount exceeding US$165.75 billion;
The public offering was oversubscribed 50 times, with frozen capital of US$25 billion, equivalent to approximately HK$196 billion.
The market is so enthusiastic about Ruixiang's stock that I can't think of a reason to lower the issue price of Ruixiang."
International placement and public offering are actually both ways of placing new shares. The relationship between the two is like wholesale and retail. One purchases more, while the other purchases less and is scattered.
International placement is aimed at powerful investors from around the world, usually institutional investors and professional investors. The subscription funds are very large and can be purchased in large quantities.
Public placements are more aimed at retail investors, and the amount of funds is smaller, which is what everyone commonly calls "innovation".
Ruixiang plans to issue 1 billion new shares in the Hong Kong stock market, with an issue price of US$30 per share, equivalent to HK$235.29 per share. This data does not cover the green shoe plan.
Among them, the international placement portion is 975 million shares, and the public placement portion is only 25 million shares.
In view of the relatively high subscription sentiment of retail investors, it was decided to activate the clawback mechanism and increase the public placement portion to 100 million shares, allowing more retail investors to successfully enter the market.
No one has any objection to this.
What really troubles Robert and others is the issue of the issue price. Ruixiang has already raised the IPO issue price twice.
Robert did not look at Lan Lan, but looked at the real person in charge, Zhang Yida, and asked: "Mr. Zhang, what is your opinion?"
Zhang Yida said with a smile, "Lan Lan's opinion is my opinion. Don't be so timid. If it really breaks, we will admit it."
Robert looked at the complacent Zhang Yida, sighed, and stopped persuading him. He just reminded him: "If the stock price breaks, the US$4.5 billion raised by the Green Shoe Placement will be wasted."
Zhang Yida nodded. He had rang the bell three times and was very clear about these basic rules for listing.
The "green shoe mechanism" is simply the "protection mechanism", which means that while underwriting the IPO, one or more underwriters will act as market stabilizers to maintain the stability of the stock price after the listing.
After a company is listed, stock prices will fluctuate due to various reasons, such as emergencies, irrational retail selling, hedge fund arbitrage, and downward inertia due to continuous declines.
Once the stock price falls, market stabilizers need to take action.
Market stabilizers can boldly buy company stocks because they can later return the stocks to the company at the IPO price for arbitrage, thereby artificially creating buying orders and raising the stock price, achieving the effect of "protecting the market."
If the stock price does not break, there will be no need to protect the market, and the market stabilizer will not need to return the stock. The company can exercise the "over-allotment" in full and raise an additional amount of funds normally.
The "market protection" behavior of market stabilizers is actually suspected of manipulating the market, but mainstream exchanges including the Hong Kong Stock Exchange and the New York Stock Exchange have adopted a tacit attitude.
"Okay, let's meet Zhenzhang tomorrow!"
After saying that, Robert and his party left neatly.
"Mr. Zhang, don't worry, I think Robert and others are too alarmist."
After Robert and the others left, Lan Lan comforted Zhang Yida.
Zhang Yida waved his hand and said with a smile, "I'm not worried. What should I be worried about?"
After chatting for a while, Zhang Yida called Lin Zhenyang, who was in the mainland, and asked about the situation there.
In this A+H share listing, Ruixiang issued 500 million shares on the Science and Technology Innovation Board. The issue price is consistent with the Hong Kong stock market, which is also 30 US dollars per share, equivalent to 213.97 yuan per share.
The Science and Technology Innovation Board has selected several securities companies as issuers, including CICC, Bank of China, China Merchants, CITIC, and its own Hanzhou Securities.
According to the relevant regulations of the Science and Technology Innovation Board, since the amount of funds raised is more than 5 billion, the underwriters are required to follow the investment with their own funds and subscribe for 2% of the issued shares, with an upper limit of 1 billion yuan.
Including green shoes, Ruixiang has raised US$11.5 billion on the Science and Technology Innovation Board, which naturally provides top-tier treatment. Brokers need to subscribe for 1 billion yuan worth of new shares, and the lock-in period is not short, as long as 24 months.
However, this is not a problem for several major securities firms. They are still very confident in the long-term growth of Ruixiang's stock price, and they have divided up the 1 billion yuan of follow-up investments in proportion.
Lin Zhenyang will mainly report these preparations to Zhang Yida at this time. When it is officially listed tomorrow, he will ring the bell in Shanghai, and Zhang Yida will be listed in Hong Kong at the same time.
"How about guessing what the listing will be like tomorrow?"
Lin Zhenyang's voice came from the other end of the phone. It could be heard that the other party was in a rather excited mood at the moment.
After six years of looking forward to it, today is finally here.
Zhang Yida didn't bother to guess, but asked about the arrival of the bell-ringing guests.
"We are all here. We have arranged to stay near the Magic City today and will witness the company's listing with us tomorrow.
There are farmers who work hard for Duoduo, short video bloggers, and gamers..."
Zhang Yida nodded, the arrangement was okay. In addition to employees and shareholders, users must not forget that even if they make gestures, they must go through this process to show that Ruixiang values the users.
Hong Kong has also invited a group of Musical.ly short video bloggers from Europe, America, Southeast Asia, Africa and other regions around the world.
As a global enterprise, when people of all colors show up there, it’s like a United Nations conference.
This kind of publicity is more direct than financial reports.
Black people still need to be invited. Zhang Yida has already made arrangements. A reporter will write a special book about it tomorrow, and then they will be sent to the United States for publicity.
Black Americans are a large group in Musical.ly's US area, and Zhang Yida doesn't want his competitors, such as Zuckerberg, to find a reason to accuse him of racial discrimination.