HONG KONG (Reuters) – Hong Kong-based on-line brokerage agency Futu Holdings Ltd has raised $ 1.24 billion by promoting new shares at $ 130 apiece to assist develop its margin finance enterprise, reported two individuals with direct data of the matter informed Reuters.

The worth was set in Hong Kong on Wednesday, individuals stated, after the inventory collapsed 23.4% in New York on Tuesday as buyers digested the deal.

The individuals declined to be recognized as a result of the data was not public. Futu declined to remark.

Futu beforehand stated it could promote 9.5 million American Depository Shares (ADRs) and spend the proceeds to extend its margin funding capability, worldwide growth and new license purposes.

Margin loans, or the quantity that brokers can lend to particular person buyers to purchase shares, has been a giant enterprise in Hong Kong lately as a lot of inventory floats have attracted retail patrons.

The newest knowledge from the Securities and Futures Fee (SFC) confirmed that there have been 1.5 million lively buyers on margin in Hong Kong on the finish of 2020, up 144% from the final 12 months.

Futu shares had been buying and selling at $ 177.92 earlier than the deal, which might have raised Futu round $ 1.7 billion if the shares had been priced round that degree.

Nevertheless, Tuesday’s 23.4% drop adopted a 16% rise on Monday, dampening the value buyers had been prepared to pay for brand new shares.

The fundraiser was Futu’s third in lower than two years and Citi analysts estimated the deal can be 3.3% dilutive to Futu’s earnings via ADS.

Futu, backed by Chinese language gaming and social media chief Tencent Holdings Ltd, listed on the New York Inventory Alternate in 2019.

(1 USD = 7.7620 Hong Kong {dollars})