Zhongji Innolight Co. is reportedly preparing to price its HK$53.4 billion ($6.8 billion) Hong Kong listing below the maximum possible price. This move brings the company closer to completing what will be the largest first-time share sale in Hong Kong in seven years.
Innolight, a Suzhou-based manufacturer of optical transceivers crucial for data centers and AI computing systems, launched its initial public offering aiming to raise approximately $7 billion. The company initially planned to sell shares at HK$1,010 ($129) each, representing a 23% discount to its Shenzhen-listed A-shares. The final pricing below maximum is consistent with earlier discussions that projected a potential discount to its mainland shares.
The global optical interconnects market leader, Innolight, generated most of its revenue in the U.S., with customers including Meta and Nvidia. Its business has been booming, with net profits doubling last year to $1.7 billion and nearly quadrupling in the first quarter. Shares have quintupled over the past year, reflecting strong demand for its products.
Despite geopolitical tensions between the U.S. and China regarding advanced AI models and hardware supply chains, prominent investors from Singapore's Temasek to Canada's CPPIB have invested in the offering. Innolight's listing underscores how Chinese hardware companies can maintain a significant presence in international markets, even with U.S. banks like Goldman Sachs, Morgan Stanley, and Citigroup involved. The proceeds from the listing will be used for research and development, global production expansion, supply chain strengthening, acquisitions, investments, and working capital.
