Zhongji Innolight Eyes $8bn Hong Kong IPO
Zhongji Innolight, a Chinese maker of high-speed optical transceivers, is chasing a Hong Kong Initial Public Offering (IPO) valued at up to $8 billion, according to reports. This would mark the city’s largest IPO since Alibaba in 2019.
Optical transceivers, which convert data into light and back again for transmission within AI data centers, are crucial components in the rapid expansion of Artificial Intelligence (AI) systems. Zhongji Innolight is one of the world’s leading suppliers, with its subsidiary, InnoLight, claiming to be a front-runner in data-centre optics.
The company, currently listed on the Shenzhen Stock Exchange, has seen remarkable growth, posting first-quarter revenue of 19.5 billion yuan ($2.9 billion) – almost three times its year-earlier figure. Profit rose nearly fourfold to 6.3 billion yuan.
Goldman Sachs, China International Capital Corp, Morgan Stanley, and GF Securities are leading the IPO syndicate, with Citigroup, HSBC, and others also involved. The listing could solidify Hong Kong’s position as a prominent market for AI-related listings this year, following a strong first half where 85 deals raised approximately HK$210 billion.
However, concerns about justifying the AI spending spree have led to recent declines in chip stocks. Zhongji Innolight’s shares, while currently below their June peak, are still seeking to capitalize on the current market momentum while it lasts.