The Chinese gaming company said it was issuing more than 171 million new shares at the maximum price of 126 Hong Kong dollars ($ 16.26) each, without offering discounts on the closing price of NetEase in New York, where its shares have been negotiated since 2000.
The transaction could raise around $ 2.8 billion for the company, assuming prices are at the top of the range. The final price is expected to be set on Friday. The company did not immediately respond to a request for comment regarding its minimum price for the new shares.
NetEase is expected to start trading in Hong Kong on June 11th.
The company said it intended to use the money to expand its online gaming offering in overseas markets such as Japan, the United States, Europe and Southeast Asia. It also intends to use some funds to fuel its ongoing search for innovation.
The increase in liquidity comes when tensions between the United States and China are increasing, threatening to break what was already a fragile commercial truce between the world’s largest economies. The two countries clashed with a new Hong Kong national security law, pointed the finger at who is to blame for the coronavirus pandemic and have a heated and constant fight over who controls the technologies of the future.
NetEase will raise billions in Hong Kong just as Chinese IPO-seeking companies on Wall Street are facing an in-depth review.
The Nasdaq (NDAQ)
last month it proposed rules that would make it more difficult for Chinese companies to publish in this exchange.
IS Following the Luckin Coffee accounting scandal, the United States Senate unanimously approved a bill last month that would prevent companies that refuse to open their books from being listed on Wall Street. The bipartisan co-sponsors of the bill have said that the goal is to “drive out misleading Chinese companies from US trade.” The bill has yet to pass the United States House of Representatives before proceeding.
In its presentation on the Hong Kong stock exchange, NetEase cited the strengthened US regulatory environment and the potential passage of the account as potential risk factors.
“The promulgation of any of these laws … could cause investor uncertainty for the issuers concerned, including us, the market price of our [US shares] it could be adversely affected and we could be eliminated if we are unable to “meet the requirements,” said NetEase.
The Nasdaq transferred to eliminate Luckin
after the Chinese coffee chain admitted that a significant portion of its revenue had been recovered last year. Luckin appealed the decision and his actions resumed negotiation. Its stocks have decreased by around 95% for the year.
Despite increased control, the US markets are still attractive
some Chinese companies. Shanghai-based Dada Nexus, an on-demand food delivery company supported by Walmart (WMT)
and Chinese e-commerce company JD.com (JD)
, he said Monday that he hopes to raise more than $ 280 million in a U.S. public offering.