Capital Calls: Poor timing for Futu share sale - Reuters

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By Reuters Staff

2 Min Read

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

A man wearing a protective mask is seen inside the Shanghai Stock Exchange building, as the country is hit by a new coronavirus outbreak, at the Pudong financial district in Shanghai, China February 28, 2020. REUTERS/Aly Song - RC2Y9F9NSHR6

HONG KONG (Reuters Breakingviews) - Concise insights on global finance.

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BAD TIMING. Futu’s shares slumped 23% this week on news it planned a share sale worth 8% of its enlarged capital. The U.S.-listed Chinese online broker raised $1.2 billion after market on Tuesday at a 5% discount to its post-slump close. That’s nearly $400 million short of the total, had it been able to apply the same concession to its Monday price. Shares slipped a further 2.6% on Wednesday.

Chinese firms’ secondary sales in New York on average have priced at a 10% discount and returned 5.5% in the first week of trade, per Sumeet Singh writing on Smartkarma. Futu’s last public transaction in August raised $300 million but it took two months before the shares traded consistently over the offer price. Its stock is still up 1,200% in the past year as its revenues trebled and profits rose eight-fold. Prospects are bright but hasty fundraising can quickly tarnish performance. Watch how it trades from here. (By Jennifer Hughes)

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