SYDNEY :Chinese medical research group WuXi XDC’s shares have risen nearly 40 per cent as the stock started trading on the Hong Kong Stock Exchange (HKEX) on Friday.

The firm raised $470 million in its initial public offering, the third-largest new share sale in the city in 2023.

The stock opened at HK$26.95 per share, compared with the IPO price of HK$20.60.

WuXi XDC sold 178.4 million shares in the IPO, which was priced at the top of the range flagged to investors when the deal launched last week.

Demand for the IPO was among the strongest this year for a larger-sized deal in Hong Kong, where investor appetite for new share sales has been weak.

The retail tranche of WuXi XDC’s IPO was 49.96 times covered, while the institutional portion was 19.6 times covered, according to its HKEX filings.

“During the IPO period, bio-pharmaceutical stocks listed in Hong Kong generally experienced noticeable increases in their share prices,” Kenny Ng, analyst at Everbright Securities International. “The performance of WuXi XDC is catching up with the industry’s overall upward trend over the past period.”

WuXi XDC is a joint venture between WuXi Biologics and WuXi STA that provides end-to-end contract research services covering antibodies and other biologics intermediates.

Investors were drawn to the IPO because of WuXi XDC’s ties to WuXi Biologics which is a well-known brand in China’s biotech sector, according to one banker who worked on the deal.

The IPO also attracted a Middle Eastern investor, the Qatar Investment Authority, which subscribed for $45 million worth of stock in the IPO, the prospectus showed.

Hong Kong and China authorities have moved to strengthen business ties with the Middle East to help drive investment into the region.

Despite the strong demand for WuXi XDC bankers are uncertain there will be a major pick up in IPOs in Hong Kong in 2024 as geopolitical risks persist and interest rates stay high.

New share sales in Hong Kong fell 32.5 per cent in the first nine months of 2023 compared with the same time last year, according to LSEG data.