China’s Baidu set to raise $3.1bn in Hong Kong stock listing

Baidu is set to raise more than $3bn in a Hong Kong stock market listing, marking the latest “homecoming” share sale by a Chinese technology group against a backdrop of tensions between Washington and Beijing.

The New York-traded search-engine company told investors on Wednesday that it expected to price shares for its Hong Kong secondary listing at HK$252 ($32.45) each, according to two people familiar with the matter. That represents a discount of about 2.7 per cent against the most recent closing level for its Nasdaq-listed American depositary receipts.

That would put Baidu on track to bring in at least $3.1bn through the sale of about 24m shares. That could rise to more than $3.5bn if banks organising the listing deem that demand is strong enough to exercise a “green shoe” option and sell another 3.6m shares.

The Hong Kong listing would make Baidu the final member of the so-called BAT stocks to list in the city after Chinese internet groups Alibaba and Tencent.

Baidu also joins a host of New York-listed Chinese tech companies, such as JD.com and NetEase, that have sought secondary placements closer to home.

US authorities have said they will delist Chinese companies from American exchanges if they do not comply with local accounting rules.

The New York Stock Exchange earlier this year delisted the ADRs of state-run Chinese groups including China Mobile and China Telecom following an executive order by then-president Donald Trump that barred US investors from holding stakes in groups suspected of having ties to China’s military.

One person familiar with the matter said strong institutional investor demand — particularly from long-only hedge funds — had helped Baidu’s share offer weather recent volatility in global equity markets. The Hong Kong listing will open up the company’s stock to more Chinese funds and retail investors.

Baidu, known as China’s answer to Google, has been expanding into new businesses including electric vehicles and video streaming in a bid to increase its revenues and shift away from its stagnating core business. 

These include a partnership with Chinese carmaker Geely Auto to make electric vehicles. Investor interest in China’s electric car market — the world’s biggest — has been buoyed by US group Tesla’s success in the country. 

The company is also following rivals into crowded new business lines such as short videos, a sector already dominated by ByteDance and Kuaishou. 

“We believe Baidu’s growth outlook is promising,” said Alicia Yap, an analyst at Citi, pointing to the company’s diversification efforts.

Baidu’s Nasdaq-listed ADRs have risen more than 20 per cent this year.

The Beijing-headquartered group’s pursuit of a secondary listing also comes as the temperature for tech companies in mainland Chinese cools rapidly.

Baidu — along with Alibaba, Tencent and ecommerce groups Meituan and Pinduoduo — has come under fire from Beijing’s powerful antitrust regulator in recent months for making acquisitions without notifying authorities. Baidu was fined last week for its 2014 takeover of Ainemo, a consumer electronics maker.

Bank of America, Goldman Sachs and Citic are joint sponsors and global co-ordinators for Baidu’s Hong Kong share sale.