Montage Technology plans to go public in Hong Kong with a maximum fundraising of HKD 7 billion

Chinese chip design company Montage Technology is seeking to raise up to approximately $902 million (about HKD 7 billion) through a Hong Kong listing. This move will not only become one of the largest IPOs in the Hong Kong market in recent times but also highlights the trend of Chinese tech companies leveraging capital markets to accelerate expansion amid the AI boom. On Friday, January 30, Montage Technology announced its plans on the Hong Kong Stock Exchange, intending to issue about 65.9 million shares at a maximum price of HKD 106.89 per share. This price represents a discount of at least 41% compared to its latest closing price of RMB 162.18 on the Shanghai A-share market. The company expects the shares to begin trading on the Hong Kong Stock Exchange on February 9. The issuance has received strong support from cornerstone investors, including Alibaba and JP Morgan, who have committed to subscribe for a total of $450 million. The list of cornerstone investors also includes UBS, Aberdeen Group Plc, and Mirae Asset Securities from South Korea. According to insiders who spoke to Bloomberg, sovereign wealth funds and long-term funds have shown strong interest, with subscription demand reaching several times the issuance size, indicating global institutional investors' confidence in this chip manufacturer benefiting from the growing demand for data centers and AI accelerators. Founded in 2004, Montage Technology focuses on designing chips that accelerate data flow for data centers and AI accelerators. The company stated that the funds raised will primarily be used for recruitment, investment, and acquisitions. China International Capital Corporation, Morgan Stanley, and UBS are serving as joint sponsors for this listing. AI Demand Drives Strong Performance Growth Montage Technology's listing comes at a time of explosive performance growth. The company recently announced that it expects its net profit for the fiscal year 2025 to reach between RMB 2.15 billion and RMB 2.35 billion, an increase of 52.29% to 66.46% compared to the same period last year. The net profit, excluding non-recurring gains and losses, is expected to be between RMB 1.92 billion and RMB 2.12 billion, with an increase of nearly 70%. The company attributes its significant profit growth to strong industry demand driven by trends in the AI sector, particularly the substantial increase in shipments of interconnect chips. As global AI infrastructure construction accelerates, the demand for high-performance interconnect chips in data centers continues to rise, becoming the main driver of the company's operational performance growth in 2025. According to analysts surveyed by Bloomberg, this growth momentum is expected to continue, with the company's net profit potentially rising further to RMB 3.3 billion in 2026. Over the past year, Montage Technology's stock price in Shanghai has more than doubled, and the company's current valuation is approximately $29 billion. Hong Kong IPO Market Welcomes a "Good Start" The listing of Montage Technology has further boosted the heat of the Hong Kong IPO market. According to data compiled by Bloomberg, driven by the financing needs of AI-related Chinese companies against the backdrop of the Sino-U.S. technology competition, the Hong Kong market recorded a fundraising amount of USD 5 billion in January, setting a record for the highest amount ever raised in January. In addition to Montage Technology, another chip manufacturer, Aisino YuanZhi Semiconductor, also announced on Friday that it is seeking to raise HKD 2.96 billion through a Hong Kong IPO, with plans to list on February 10. The IPO of Aisino YuanZhi is arranged by CICC, Guotai Junan, and Bank of Communications, and has begun accepting subscriptions from retail and institutional investors