NetEase Picks Banks for Hong Kong Second Listing

NetEase to Have Filed for Second Listing in Hong Kong

(Bloomberg) -- NetEase Inc. has picked banks for its planned second listing in Hong Kong, according to people familiar with the matter, joining other Chinese technology companies in tapping the city’s stock market for new funds.

The company is working with advisers including Credit Suisse Group AG and China International Capital Corp. on preparations for the offering and has confidentially filed a listing application with the stock exchange, the people said. The share sale could happen as soon as the second half of this year, one of the people said, asking not to be identified because the information is private.

The Hangzhou-based online gaming and entertainment company, which currently trades on the Nasdaq, has a market value of about $44 billion.

Shares of bourse operator Hong Kong Exchanges & Clearing Ltd. extended gains after the Bloomberg News report and were up 2.9% at the close Tuesday. NetEase’s American depositary receipts jumped as much as 5.5% in U.S. trading and were trading 3.4% higher at 12:15 p.m. in New York, outpacing the 2.1% rise in the benchmark Nasdaq Composite Index.

No final decisions have been made, and details of the proposed offering could change, the people said. Representatives for NetEase, Credit Suisse and CICC declined to comment.

NetEase was among the Chinese firms that had discussed secondary listings with HKEX after Alibaba Group Holding Ltd. raised $13 billion in its 2019 secondary share sale, Bloomberg News reported in January. Chinese e-commerce giant Inc. has also filed confidentially for a second listing in the Asian financial hub, people familiar with the matter have said.

Sales of mobile games are surging this year as coronavirus-driven lockdowns and other social distancing measures have led to more time and money spent on gaming, according to Bloomberg Intelligence analysts Matthew Kanterman and Vey-Sern Ling. Tencent Holdings Ltd. and NetEase are the market leaders in iOS mobile games and the analysts expect the duo to maintain their leads. NetEase has a 6.1% share of the market, according to analytics firm Sensor Tower.

Games developed by NetEase are among the most popular in China, including the hit titles Fantasy Westward Journey 3D and Knives Out. The company also operates international online games locally, such as Activision Blizzard Inc.’s World of Warcraft.

While still reliant on gaming for the bulk of its revenue, NetEase is competing with Tencent and Alibaba to provide a diverse set of online services, including music streaming and digital education, to the world’s second-largest economy.

©2020 Bloomberg L.P.

With assistance from Bloomberg