UPDATE 3-Tencent's China Literature in stellar debut as HK investors pile into tech

into tech@

* Gains helped by investor enthusiasm for tech stocks

* Poised to have biggest first-day pop of any large IPO this year

* IPO saw massive demand from HK retail investors

* China Literature has market value of nearly $13 bln

HONG KONG, Nov 8 (Reuters) - Tencent's e-book unit China Literature Ltd saw its shares double in their debut on Wednesday as Hong Kong investors embrace a rush of tech listings, with the stock on track to mark the biggest first-day pop for a large IPO globally this year.

The company's stunning debut has shown that Hong Kong has raised its game as it strives to compete with the New York and Nasdaq exchanges which have been the more traditional home for Chinese tech IPOs seeking to attract international investors.

China Literature's shares rose to as much as HK$110 in early trade, compared to its offering price of HK$55 per share, giving it a market value of nearly $13 billion. The shares eased to HK$100 in early afternoon trade.

"As the first Tencent-controlled subsidiary tapping capital markets, China Literature has to perform well in the secondary market to set a good example for other Tencent units," said an institutional investor who took part in the IPO, declining to identified as he was not authorised to speak to the media.

But while many investors cheered the stock on, others noted that Wednesday's valuations for the Tencent Holdings Ltd unit were stretched.

Company executives project net profit of 400 million yuan ($60 million) for 2017 and 1 billion yuan for 2018, according to investors who attended IPO roadshow meetings.

That implies China Literature is trading at 201 times its forecast 2017 earnings and 80 times its 2018 projections. By contrast, Tencent is trading at 51 times its 2017 forecast profits.

Co-CEO Liang Xiaodong told reporters after the opening bell ceremony that the stock's surge was a pleasant surprise.

"Going forward, we will conduct M&As and forge strategic alliances ...in a bid to stay ahead in our industry," he said.

China's biggest e-book platform offers 9.6 million literary works from 6.4 million authors. Tencent began e-book publishing in 2004 and after an internal reorganisation, formed China Literature in 2013.

Demand for the IPO, which raised $1.1 billion, was such that retail investors bid for 625 times the shares on offer - tying up HK$521 billion ($67 billion), equivalent to a fifth of Hong Kong's cash in circulation, as they waited to see whether their offers would be accepted.

A closing gain of more than 44 percent would make it the best-performing debut this year worldwide by any company raising more than $500 million, according to Thomson Reuters data.

Its IPO success comes as the number of tech offerings in Hong Kong is picking up. Online insurance group ZhongAn raised $1.5 billion in September in Asia's biggest-ever financial technology IPO. Its shares jumped 18 percent in their debut.

Razer Inc, a gaming hardware maker backed by Hong Kong billionaire Li Ka-shing as well as Intel Corp, will make its Hong Kong debut next Monday. It has priced its HK$4.12 billion ($528 million) IPO near the top end of its price range, IFR reported on Tuesday.

"(ZhongAn) gave people size and returns, so retail and high net worth individuals got excited. And that is being reflected in China Literature and Razer," said one banker involved in the China Literature deal, also declining to be identified.

But even so, for many Chinese tech firms, the U.S. market remains more attractive.

Sogou Inc, China's second-largest search engine and around 45 percent owned by Tencent, is due to list on Thursday after pricing an up to $585 million IPO on Wednesday.

Tencent owns 62 percent of China Literature, while Carlyle Group LP holds 12.2 percent. A further 6 percent is owned by Trustbridge Partners, which was founded by Shujun Li, the former CFO of Shanda Interactive.

($1 = 6.639 yuan) (Reporting by Jennifer Hughes and Julie Zhu; Additional reporting by Sumeet Chatterjee and Donny Kwok in Hong Kong, and Gaurav Dogra in Bengaluru; Editing by Edwina Gibbs)