Chinese optical module leader aims to raise up to HK$63.3 billion as investors weigh whether global demand for AI networking will justify lofty valuations.
Chinese optical module maker Zhongji Innolight (300308.SZ) is set to launch what could become Hong Kong’s largest initial public offering of 2026. The company seeking to raise as much as HK$63.3 billion in a listing that has attracted heavyweight cornerstone investors including Temasek, Alibaba, Tencent and BlackRock.
The listing could become Hong Kong’s biggest technology IPO since Alibaba‘s (9988.HK) secondary listing in 2019 if it surpasses the proceeds raised by battery giant CATL (3750.HK) (300750.SZ).
Innolight, whose shares already trade on the Shenzhen Stock Exchange, began its Hong Kong public offering on July 22. It has set a maximum offer price of HK$1,010 per share, implying base proceeds of around HK$55 billion ($7 billion). If the over-allotment option is fully exercised, total fundraising could reach HK$63.3 billion. Pricing is scheduled for July 28, with trading expected to begin on July 30.
The deal would eclipse every Hong Kong IPO completed so far this year. According to data compiled by East Money Choice, 100 companies have listed in Hong Kong in 2026, raising a combined HK$273.4 billion including over-allotments.
Innolight has ranked first globally by revenue in optical interconnect solutions since 2021, according to China Insights Consultancy. Industry researcher LightCounting estimates the company held a 21.2% global market share in 2025, well ahead of its nearest competitor on 14%.
The company is particularly dominant in high-speed optical modules used in artificial intelligence data centers. It accounts for around 40% of the global 800G optical module market and an estimated 50% to 70% of the emerging 1.6T segment. It is also a key supplier for Nvidia servers based on the company’s Blackwell AI computing architecture.
Discount to A shares draws attention
The IPO has attracted particular attention because of the pricing gap between Innolight’s Hong Kong shares and its Shenzhen-listed stock. Its A shares closed at 1,136.55 yuan on July 21, equivalent to roughly HK$1,317 at prevailing exchange rates, giving it a market capitalization of around 1.27 trillion yuan ($188 billion). The maximum Hong Kong offer price therefore represents a discount of about 23%.
Price gaps between A and H shares are common because mainland China and Hong Kong have different investor bases, liquidity profiles and valuation frameworks. However, analysts say the size of the discount is notable given Innolight’s market leadership.
Brokerage BOCOM International recently set a target price of 1,600 yuan for the A shares, equivalent to 32 times projected 2027 earnings, arguing the company still trades at a valuation discount to comparable global optical communications companies.
Innolight’s Shenzhen-listed shares already trade on a price-to-earnings ratio of roughly 109, reflecting high expectations for continued earnings growth. Some investors argue that the lower-priced Hong Kong shares could put pressure on the mainland valuation if growth slows.
Goldman Sachs added fuel to the debate on July 17 by more than doubling its 12-month target price for the A shares to 2,581 yuan from 1,187 yuan. The bank argued the optical module industry is entering a new earnings cycle as demand shifts from 800G products to faster 1.6T and eventually 3.2T modules, driven by successive upgrades to Nvidia’s AI server platforms.
Whether Hong Kong’s lower pricing ultimately drags down the mainland valuation, or international investor demand leads to a broader rerating, is expected to become a key focus after the shares begin trading.
Global investors back AI supply chain
The IPO has secured commitments from 33 cornerstone investors, who have agreed to subscribe for around HK$27 billion of shares, or nearly half of the base offering. Their holdings will be subject to a six-month lock-up.
The cornerstone group includes Singapore state investor Temasek, the Abu Dhabi Investment Authority (ADIA) and the Canada Pension Plan Investment Board (CPP Investments), alongside global asset managers including BlackRock, JPMorgan Asset Management, Wellington Management and Hillhouse affiliate HHLR.
Alibaba and Tencent have each committed $50 million. While relatively small compared with some cornerstone investments, their participation is viewed as strategically significant because both companies are major cloud computing providers and customers of optical networking equipment.
Expansion focused on next-generation products
According to the prospectus, 35% of the proceeds will be invested in research and development of optical interconnect products, while 30% will fund global manufacturing expansion. Another 15% is earmarked for strategic acquisitions, with the remainder allocated to strengthening the supply chain and general corporate purposes.
The planned capacity expansion will focus on higher-speed 1.6T and future 3.2T optical modules rather than 800G products, where pricing has begun to soften. The company says demand for next-generation modules continues to exceed supply, supported by its relationship with Nvidia.
Goldman Sachs estimates Innolight’s capital expenditure will increase 155% in 2026, largely to support production of higher-speed optical modules.
The company has also indicated that acquisition targets could include silicon photonics developers, co-packaged optics technologies or upstream optical chip suppliers as it seeks to strengthen its technological position and improve supply chain resilience.
For investors, the listing offers a closely watched test of international appetite for companies supplying the infrastructure underpinning the global artificial intelligence boom. Whether the IPO’s discounted pricing proves conservative or becomes the foundation for a broader valuation rerating will become clearer after trading begins on July 30.
Source:
Alpha Works Research Institute
