Zhongji Innolight opens books for Hong Kong’s biggest IPO in seven years

Zhongji Innolight, the Chinese optical transceiver maker that has become one of the most critical suppliers to the global AI data center buildout, opened its books to investors on Tuesday for a Hong Kong listing that could raise as much as $8 billion — making it the city's largest initial public offering in seven years.

The Deal

The Shenzhen-listed company is offering 54.5 million shares at a maximum price of HK$1,010 apiece, with expected gross proceeds of up to HK$55 billion (approximately $7 billion), according to its listing document. With the overallotment option exercised, the deal could swell to roughly $8.1 billion. The subscription period runs through July 27, with shares expected to begin trading on July 30.South China Morning Post+3

A total of 33 cornerstone investors have committed $3.45 billion, accounting for nearly half the offering. The roster includes Temasek Holdings, BlackRock ↘ 0.54%, Canada Pension Plan Investment Board, Abu Dhabi Investment Authority, JPMorgan ↘ 0.73% Asset Management, Hillhouse Capital affiliate HHLR Advisors, Alibaba ↘ 4.74%, and Tencent. Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.38%, CICC, Morgan Stanley ↘ 0.89%, and GF Securities are acting as joint sponsors.FuTu News+2

At the maximum offer price, Innolight would carry a market capitalization exceeding $180 billion, making it one of the most valuable companies to list in Hong Kong. The company has said it plans to allocate roughly 35 percent of proceeds to R&D in optical interconnect products and 30 percent to expanding global production capacity.FuTu News

US Restrictions Cast a Shadow

The listing comes despite Washington's decision in June to add Innolight to the Pentagon's Section 1260H list of companies deemed to be aiding China's military. The designation, part of a broader expansion that also swept in Alibaba, Baidu ↘ 2.87%, and BYD, does not impose direct sanctions but triggers procurement restrictions barring the U.S. Department of Defense from contracting with listed entities.MarketScreener+1

Innolight disclosed these risks in its post-hearing prospectus published on July 16. The company is a key supplier of optical transceivers to Nvidia ↘ 1.47% and other major cloud computing firms building out AI infrastructure, a relationship that has driven its Shenzhen-listed shares up more than 80 percent this year.LinkedIn+2

Hong Kong's IPO Revival

If completed at its full size, the offering would be Hong Kong's largest since Alibaba's $12.9 billion listing in 2019. The deal marks a return of mega-listings to a market that has struggled in recent years to attract blockbuster offerings amid geopolitical tensions and regulatory uncertainty in China. Innolight received Hong Kong stock exchange approval for its listing plan on July 17, according to Reuters, after clearing the China Securities Regulatory Commission earlier that week.Bloomberg+3