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Case
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Reference no. 299-037-1
Published by: Asia Case Research Centre, The University of Hong Kong
Published in: 1999
Length: 19 pages
Data source: Published sources

Abstract

Tianjin Development Holdings Limited, incorporated in Hong Kong in May 1997, was in the process of raising equity funds through Initial Public Offering (IPO) for financing the expansion of its subsidiaries. The company planned to list in the Hong Kong Stock Exchange on the 12th October 1997, with which it would acquire a ''Red Chip'' status. Red Chip companies had had a series of past successes in raising equity capital through IPO, the latest being Beijing Enterprises with its IPO oversubscribed 1276 times, a record in the history of the Hong Kong Stock Exchange!! The bullish sentiments for Red Chips, however, started waning soon after the handover. The case looks at the circumstances surrounding the ''Rise and Fall of the Red Chips'' and the pricing of Initial Public Offering under bearish stock market sentiments. The Tianjin case serves as a useful vehicle for students to: (1) gain insight into the fund-raising activities of Mainland Chinese firms; (2) learn about asset injections; (3) learn about the rise and fall of red-chip companies; (4) discuss IPO ''windows''; and (5) exercise valuation skills in the pricing of a red-chip IPO.
Location:
Industry:
Other setting(s):
1997

About

Abstract

Tianjin Development Holdings Limited, incorporated in Hong Kong in May 1997, was in the process of raising equity funds through Initial Public Offering (IPO) for financing the expansion of its subsidiaries. The company planned to list in the Hong Kong Stock Exchange on the 12th October 1997, with which it would acquire a ''Red Chip'' status. Red Chip companies had had a series of past successes in raising equity capital through IPO, the latest being Beijing Enterprises with its IPO oversubscribed 1276 times, a record in the history of the Hong Kong Stock Exchange!! The bullish sentiments for Red Chips, however, started waning soon after the handover. The case looks at the circumstances surrounding the ''Rise and Fall of the Red Chips'' and the pricing of Initial Public Offering under bearish stock market sentiments. The Tianjin case serves as a useful vehicle for students to: (1) gain insight into the fund-raising activities of Mainland Chinese firms; (2) learn about asset injections; (3) learn about the rise and fall of red-chip companies; (4) discuss IPO ''windows''; and (5) exercise valuation skills in the pricing of a red-chip IPO.

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Location:
Industry:
Other setting(s):
1997

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