China Logistics raises $433m with feisty pricing

The Chinese warehouse and logistics parks operator adopts aggressive pricing on its IPO despite an underwhelming response from investors.
China Logistics Property's warehouse in Shenyang, China
China Logistics Property's warehouse in Shenyang, China

China Logistics Property stunned the market on Thursday by pricing its HK$3.4 billion ($433 million) Hong Kong initial public offering at the top-end of price guidance, despite a less-than-stellar order book.

Final pricing for the 1 billion-share deal was settled at HK3.25 per share, at the highest end of the guidance range that went as low as HK$2.55.

Such aggressive pricing is in stark contrast to other recent share sales in Hong Kong, including CDB Leasing and Orient Securities, which both settled their transactions towards the bottom end of guidance.

The operator of warehouses and logistics parks failed to draw any significant demand from institutional investors and most of the orders came from Chinese corporations, including four cornerstone investors who took up 51% of the deal at final pricing, said a source familiar with the situation.

These comprised property developer Sino-Ocean Group, LRC Belt & Road Investment, China Fintech Investment, and Anbang Investment, he told FinanceAsia.

The Hong Kong public offering was heavily undersubscribed, the source added, which implies that the company’s marketing strategy to promote itself as a high-growth e-commerce firm failed to appeal to most retail investors.

“It is literally [just] a Chinese property company,” said one fund manager in Hong Kong, who looked at the deal but did not participate.

“Investors clearly differentiate it against the likes of real Chinese e-commerce players such as Alibaba,, and SF Express,” he said. 


On a positive note, the firm is still valued at a discount to Singapore-listed Global Logistics Properties, the closest comparable company to China Logistics, even if the final pricing is aggressive on paper.

At HK$3.25 China Logistics will have a market capitalisation of $1.2 billion, a discount of 51.4% to its projected net asset value at the end of this year. In comparison, Global Logistics Properties currently trades at a NAV discount of 36%. 

China Logistics will use 46.1% of proceeds to pay down debt and 43.4% to redeem convertible preference shares held by Carlyle Group, a pre-IPO investor with a 16.7% stake before listing.

The company is expected to start trading on July 15.

Joint sponsors of the IPO were Credit Suisse and Deutsche Bank, while joint global coordinators were Bank of America Merrill Lynch and AMTD. ABC InternationalCIMBCMB International, China Merchants Securities, Haitong and ICBC were joint bookrunners.

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