(Yicai Global) May 14 -- Foxconn Industrial Internet Co., a subsidiary of Taiwan's Foxconn Technology Group, will impose a mandatory lock-up period for offline subscription to its initial public offering, IPO, to reduce the impact of the large fundraising process on the secondary market, showed its latest prospectus. In a rare move, the company will bring in strategic, or cornerstone, investors apart from institutional and individual ones.

The company plans to adopt a combined method of targeted placement to strategic investors and offline placement to bidders from institutional investors, while offering online subscription to individual investors. In addition, a clawback mechanism is established to adjust the number of online and offline subscriptions depending on the demand.

Foxconn Industrial Internet intends to issue approximately 1.97 billion A-shares, accounting for 10 percent of its enlarged capital, to raise funds, which it has yet to specify, of which CNY27.3 billion (USD4.3 billion) will be invested in data center, cloud computing and 5G wireless network technologies, it said. The online and offline and online subscription for its shares will kick off on May 24, the prospectus showed.

Prior to the start of the clawback mechanism, the initial placement to strategic investors will be about 590 million shares, accounting for approximately 30 percent of its public share offering. The initial offline IPO issuance volume will be 965 million shares, accounting for approximately 70 percent of the total. The final offline and online issuance volume will be determined based on the clawback situation.

Lock-Up Period

It is worth noting that on the shares allocated to the strategic investors this time, there will be a lock-up period of 12 months for 50 percent of the shares, and a lock-up period of 18 months for the remaining half. To reflect the intention of strategic cooperation with the company, strategic investors can also voluntarily extend the lock-up period of all their shares to no less than 36 months.

For the offline issuance to the institutional investors, 30 percent of the shares allocated to each investor have no lock-up requirement, and 70 percent will be locked up for 12 months. In other words, a partial lock-up clause has been added to the offline subscription.

Foxconn's strategic placement will significantly reduce the impact on the market, insiders said, adding that the mandatory lock-up period for offline placements also significantly reduces the number of stocks that can be sold on the first day of stock listing.

Editor: Mevlut Katik