Gold Miner Strikes It Rich With World’s Largest IPO Since May
One Asian market is setting the pace for stock listings this year, outdoing Nasdaq and the NYSE.
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Shares in gold miner Zijin Gold International (HK:2259) are gleaming Tuesday as the company debuts its shares on the Hong Kong market, the largest initial public offering (IPO) around the world since May.
Zijin Gold has raised US$3.2 billion in its IPO, seeing its shares price at HK$71.59 and close Tuesday at HK$120.60. That’s an increase of 68.5% at the close, with the shares at one point touching an intraday high of HK$123.
Zijin Gold International is the overseas unit of Hong Kong-listed Zijin Mining Group ZIJMF (HK:2899). The parent has already seen its shares double this year, up 129.9%, with shares listed in both Hong Kong and Shanghai.
Shares in Short Supply Given Demand
The spinoff sold 349 million shares, with 10% set aside for Hong Kong retail punters and the rest sold to international investors.
The retail portion was oversubscribed to the tune of 241 times the number of shares on offer, while the global offering saw demand at 20 times the shares up for sale.
That means the overallotment of 52.35 million shares will surely be exercised.
Zijin Gold’s debut was pushed back by one day due to Typhoon Ragasa, which swept through the city last week.
Largest Since Battery Debut in May
The Zijin Gold debut is the largest in the world since battery-making giant Contemporary Amperex Technology or CATL (HK:3750) raised US$5.3 billion in Hong Kong in May. I wrote about the CATL listing, asking whether U.S. investors are missing out on the “biggest company they’ve never heard of,” since the CATL listing in Hong Kong excluded U.S. investors.
Zijin Gold captures the operations of Zijin Mining’s eight gold mines located outside China. Last year, those mines produced 1.3 million ounces of gold, with operations in Tajikistan, Kyrgyzstan, Australia, Guyana, Colombia, Suriname, Ghana, and Papua New Guinea.
Although gold prices are down slightly as I write, Zijin Gold lists with the metal hitting a record price during Asian trade on Tuesday, at USS$3,871.72. Gold has gained 10.5% in September alone.
The Swiss bank UBS suggests that gold could rise as high as US$4,200 per ounce by mid-2026, in its bull-case scenario.
Parent Zijin Mining, based in Fujian Province near Taiwan, also mines copper, zinc, lithium, silver, iron, tungsten and molybdenum. It extracts the minerals, smelts them, and has a commodities-trading arm.
Hong Kong Setting Global IPO Pace
Hong Kong has regained its position as the world’s largest market for new-stock listings. In all, 66 companies have raised US$23.3 billion in Hong Kong IPOs through the first three quarters, according to figures released Tuesday by the London Stock Exchange Group.
That puts Hong Kong ahead of the New York Stock Exchange, in second place with US$16.5 raised in IPOs, and Nasdaq, in third with US$15.3 billion.
Hong Kong last topped IPO activity globally back in 2018. In the years since, the troubles faced by the Chinese economy in the stop-start recovery from the Covid-19 pandemic ensured that Hong Kong shares were often among the world’s worst-performing major markets, discouraging listing activity.
That changed last September, when the Hong Kong market suddenly shot higher on the promise of greater support for the private sector and equity markets from the Beijing government. Since September 13 last year, Hong Kong’s benchmark, the Hang Seng index, has gained 54.6%.
China Tech Stocks Outperform
China tech stocks have been particularly strong performers, a call that I recommended in February, as my favorite Asia play. The Hang Seng Tech Index has advanced 87.2% since September 13, 2024. The Hang Seng China Enterprises Index, capturing the performance of mainland companies in general that are listed in Hong Kong, is up 57.4% since the same point.
Zijin Gold says it plans to use around 50% of the proceeds from the IPO to upgrade and expand capacity at its existing mines. Around 33% will go toward the completion of its acquisition of the Raygorodok Gold Mine in Kazakhstan, which it agreed to buy in June for US$1.2 billion. The remainder will mainly be invested in exploration efforts.
The IPO was led by Morgan Stanley (MS) and Citic Securities CIIHY (HK:6030), although Macquarie Group MQBKY (ASX:MQG) was the only other non-Chinese investment bank to take part as a lead manager.
Included among the cornerstone investors taking a guaranteed chunk of the offering are the Singapore sovereign wealth fund GIC, and the global asset managers BlackRock and Schroders. Parent Zijin Mining retains 86.7% control of the gold miner’s shares after the IPO.
While the oversubscribed nature of this offering explains Tuesday’s strong first-day showing, the share price of Zijin Gold will surely track future changes in the price of bullion. With U.S. interest-rate cuts on the cards and global economic uncertainty, gold appears set to extend its record run.
At the time of publication, McMillan had no positions in any securities mentioned.
