HONG KONG: The stock market debut of a utility trust owned by Asia’s richest man Li Ka-shing went with a whimper not a bang on Wednesday, despite being Hong Kong’s biggest initial public offering of the year.
Shares in HK Electric Investments—carved out from Li’s Hong Kong-listed utilities firm Power Assets—dropped 2.02 percent to HK$5.34 ($0.69) on Wednesday trade, after raising $3.11 billion earlier this month ahead of the initial public offering (IPO).
The company sold 4.43 billion units at the low end of its HK$5.45 to HK$6.30 indicative price range.
The benchmark Hang Seng Index went up 0.82 percent in Wednesday trade.
Li’s utility assets have endured weak profit growth after the Hong Kong government capped the rate of return on electricity firms five years ago at 9.99 percent, down from 15 percent.
The rate of return pegs the maximum profit the city’s electricity companies can make to the value of their fixed assets.
“The growth prospect of HK Electric is very limited,” Tanrich Securities Vice President Jackson Wong told Agence France-Presse.
The restricted rate of return and the fact that the utilities company is “confined” within the southern Chinese city are factors negatively affecting its debut, Wong said.