Just days after Hong Kong lost Chinese e-commerce giant, Alibaba, to a New York IPO listing, the richest man in Asia - Li Ka-Shing details a dual-city IPO for his global retail group, AS. Watson & Co.. The proposed double listing in Hong Kong and London promises to be one of the world's biggest public stock offerings since the Japan Airlines IPO in 2012.
All is not lost in Hong Kong after Alibaba's decision to list in New York. Days after Alibaba's announcement, Asia's richest man Li Ka-shing is sticking with Hong Kong.
Just three months after listing his power company, Hong Kong Electric, in January, Li is now reportedly planning to launch his retail flagship A.S Watson & Co. in Hong Kong and in London.
Watsons is one store you will find on almost every corner in Hong Kong. In fact, it's like you know you're in Hong Kong when you find a Watsons store. Everybody gets their daily fix of medicines, toiletries and other provisions inside. But its parent A.S. Watson Group also owns Superdrug in the U.K. and that explains the logic of going public in London as well, in a dual-listing with Hong Kong that could raise up to six billion U.S. dollars.
Dealogic says that would make Watsons the biggest IPO since Japan Airlines raised 8.5 billion dollars in Tokyo in September 2012. Some analysts estimate Watsons' value at over 20 billion U.S. dollars. Sources with knowledge of the deal say the company is working closely with Bank of America, Merrill Lynch, HSBC Holdings and Goldman Sachs Group on the IPO.
Ronald Wan, Chief China Advisor of Asian Capital Holdings, shares his reservations: "Watsons is a diversified retail play. It's not particularly focusing on China. Relatively its European operations are quite big so if investors think the European economy is recovering, I think it's a good try, but investors prefer Asian play or Chinese play. I think Watsons will not be a good investment choice."
The planned Watson IPO underscores the continued allure of non-technology companies to go public here in Hong Kong.
"Probably we will see a lot of smaller Chinese companies coming out of some old industries that are favoured by the market right now, like environmental protection, healthcare or even gaming. So probably we would still see more IPO names coming out of those favoured sectors," said Alex Wong, Director of Asset Management at Ample Financial Group. "But of course, bigger technology companies would probably pick the U.S. because the culture there is more favourable for that sector."
Li Ka-shing's Hong Kong Electric executives popped champagne corks when their company went public in January. Watson executives will have to wait a few more months before celebrating, as their dual-listing is reportedly planned for June.