Chinese cosmetics giant Mao Geping jumped 42.3% in grey market trading.

Mao Geping priced its shares at the top end of an indicated range, as it aims to raise US$270 million in a Hong Kong initial public offering (IPO), which was oversubscribed more than 700 times.

The company is selling 70.6 million shares in its IPO, which is set to launch on Tuesday. China International Capital Corporation is its sponsor. The shares were priced at HK$29.80, according to exchange filings on Monday.

The IPO attracted an overwhelming response from retail investors; it has been oversubscribed 702 times according to bankers close to the deal, making it one of the most popular listings of the year. China Resources Beverage was more than 200 times oversubscribed when it listed in October.

Mao Geping plans to issue 70.59 million H shares, with 10 per cent allocated for the retail offering. Its international placement has reportedly been oversubscribed several times.

It comes as the city has seen some improvement in new-listing activity this year. Around 95 per cent of Hong Kong’s IPOs were oversubscribed, up 4 percentage points from a year earlier.

The Hangzhou-based company was founded by make-up artist Mao Geping in 2000. Mao sought to promote Chinese make-up artistry and aesthetics globally. The brand’s products often depict designs that mimic classical Chinese paintings.

The company’s fusion of traditional eastern aesthetics with modern beauty standards has been very popular among Chinese consumers.

Today, Mao Geping is the only domestic player among the top 10 premium beauty groups in China, ranking seventh based on total retail sales in 2023 with a market share of 1.8 per cent, according to Frost & Sullivan.

The company is a leader in the premium beauty market in China, an industry that was valued at US$9.9 billion in 2023. That is expected to jump to US$16.7 billion by 2028, according to market researcher Euromonitor International.

After the fundraising, the company said it would expand its sales network, aiming to open around 30 new counters in department stores annually in China, as well as two to four new counters per year in overseas markets, according to its prospectus.

Six cornerstone investors subscribed for US$100 million worth of shares, led by Chinese investors CPE and Loyal Valley, according to the prospectus. Other investors are Seraphim Advantage, IvyRock Asset Management, Brilliant Partners Fund, China Core Fund and Mega Prime Development.

Hong Kong’s IPO market has seen an improvement in activity in the second half of the year and the rebound is expected to put the city’s exchange in the fourth spot globally, according to EY.

There are 64 IPOs with total proceeds of more than HK$83.4 billion that are expected for the year, as of November 30, representing an increase of 80 per cent, EY said in its report.