By George Chen and Fion Li

HONG KONG (Reuters) - Shares of Peak Sport Products Co (1968.HK) tumbled 17 percent on Tuesday 29 September, in the worst debut of a Hong Kong IPO in the current wave of offerings.

Photo: www.peaksport.com.hk

On Tuesday 29 September, Peak published a full-page advertisement in Hong Kong newspapers featuring seven star basketball players including Dikembe Mutombo of the Houston Rockets and Jason Kidd of the Dallas Mavericks, who have been signed up by Peak for brand promotion.

The sports shoe maker became the latest victim of cooling investor enthusiasm for Hong Kong offerings when its shares closed at HK$3.40, down from its HK$4.10 price which raised HK$1.72 billion ($221 million).

Despite Peak's tough start on the public market, the offering is a windfall for Sequoia Capital, the largest U.S. venture capital firm, which has backed the strong local rival for Nike Inc (NKE.N) in China since 2007 and made a big win in its investment.

Sequoia Capital invested $6 million in Peak for an around 8 percent stake at just HK$0.50 per share in August 2007 and invested an additional $20 million in Peak for about HK$1.70 per share less than six months ago.

Now, Sequoia holds around 10 percent of Peak after its listing, which was handled by Credit Suisse (CSGN.VX).

"We've witnessed the fast growth of China's shoe-making industry and Peak is obviously becoming a market leader despite tough competition," said Neil Shen, China founding partner of Sequoia Capital,

"After Peak, we're interested in investing more in China's consumer-driven sectors," Shen told Reuters.

"We look at the company from a long-term perspective and we are confident of our long-term development," Peak Chief Executive Xu Zhihua told reporters after a listing ceremony, when asked for comments on the performance of its share debut.

Sequoia Capital, which backs many top technology companies including Google Inc (GOOG.O) and Apple Inc (AAPL.O) in the United States, is focusing on consumer-related sectors in China as China encourages its 1.3 billion population to spend more to fuel growth of its economy, already the world's No.3.

Global private equity funds have poured billions of dollars into China deals in the past few years, but successful exits from investments remains a major challenge to most investors in China where rules on foreign investment can be tough and vague.

In August, Sequoia Capital agreed to invest $63 million in American Dairy Inc (ADY.N) to help the China-focused milk powder maker boost its business.

In terms of absolute numbers for investment returns, Peak's listing so far marked the biggest success for Sequoia Capital in China where the venture capital fund has invested in about 60 portfolio companies since 2005, Shen noted.

($1=7.750 Hong Kong Dollar)

(Additional reporting by Raymond Leung; Editing by Chris Lewis and Jon Loades-Carter)