Hong Kong to host another blockbuster IPO with China Tower's flotation

The mega offering comes recently after Xiaomi’s recent public debut.

Reuters reports that the world’s biggest operator of mobile phone towers China Tower has applied for a public listing in Hong Kong in what could easily become the city’s second $10b offering this year after smartphone maker Xiaomi’s blockbuster public debut. 

China Tower, which operates 1.9m tower sites across the world, may seek a valuation of as much as $40b, insider sources told Reuters. Its IPO is being led by China International Capital Corp and Goldman Sachs.

The move would mark the first time the city has hosted two mega-flotations in a row when insurer AIA and Agricultural Bank of China raised $20b and $22b respectively in 2010.

Although the move is set to boost the city's status in global IPO rankings, analysts warn that series of blockbuster IPOs could give rise to a cash crunch in Hong Kong's $5.6t equity market and push Hibor rates up. 

“We could expect a very notable increase in Hibor if an IPO is very oversubscribed,” said Ronald Man strategist at Bank of America Merrill Lynch in Hong Kong. “Hong Kong dollar funding conditions could tighten temporarily during an IPO process - this tightening of funding conditions usually lasts until the IPO process is over.”

A listing of that magnitude could also pump downward pressure on the local stock market, said Hao Hong, chief strategist at Bocom International Holdings Co. in Hong Kong, adding that blockbuster IPOs would further cap the money that could otherwise be chasing stocks.

Here’s more from Reuters: