Hong Kong retail investors seek $50b in loans for Kuaishou IPO

The online video app is looking to price shares at the HK$105 to HK$115 range, two sources said, as the company aims to raise up to US$5.4 billion in its IPO.

According to representatives from HSBC and the Bank of China (Hong Kong), demand for margin loans to purchase Kuaishou stock hit a first-day record on January 26. The two banks have made at least HK$350 billion (US$45.1 billion) worth of margin financing available as of yesterday, with HK$50 billion (US$6.5 billion) more being offered by local small brokerages.

Kuaishou is selling 9.1 million shares to retail investors as part of the financial debut, accounting for 2.5% of the total stock allotment. With this demand for margin loans, the IPO’s retail portion is expected to be at least 385x oversubscribed based on the number of available shares.

Under Hong Kong’s clawback rules, the total share of stock allocated to retail investors will increase from 2.5% to 6%, a term sheet for the IPO stated.

The development comes as retail investors gain revitalized interest in stock buying on the back of rising money supply, low or zero interest rates, and the start of Covid-19 vaccine rollouts globally.