Hong Kong IPOs set to hit annual record in 2021, KPMG forecasts

KPMG forecasts Hong Kong to see a record-breaking annual fundraising amount of HKD500 billion over 2021.

KPMG forecasts Hong Kong to see a record-breaking annual fundraising amount over 2021.

28 September 2021

28 September 2021, Hong Kong – The IPO pipeline in Hong Kong remains robust with more than 200 companies seeking listings by the end of Q3. KPMG forecasts Hong Kong to see a record-breaking annual fundraising amount of HKD500 billion over 2021.

KPMG’s mainland China and Hong Kong 2021 Q3 IPO Review shows that, globally, totally funds raised reached USD330 billion during 2021 Q3 YTD, soaring to a 5-year high. The US, Hong Kong and A-share markets continue to lead the market, raising over a total of USD211.4 billion by the end of the third quarter of 2021.

Paul Lau, Partner, Head of Capital Markets and Professional Practice, KPMG China, says:

Market sentiment stayed strong amid an improving economic outlook in major economies and ample liquidity. With healthy pipelines in the US, Hong Kong and A-share IPO markets, we believe the global IPO market will remain active for the rest of the year.

In terms of IPO proceeds, the Shanghai Stock Exchange ranked third among the top five stock exchanges year-to-date, with the Hong Kong Exchange following in fourth at USD35.7 billion. TMT, Industrials and Healthcare/Life Sciences were the top sectors, contributing over 69% of total funds raised in the US, Hong Kong and A-share markets.

In mainland China, the A-share IPO market witnessed a record high fundraising in 2021 Q3 YTD, recording 382 deals and raising a total of RMB 408.9 billion, driven by the continued popularity of STAR and ChiNext boards.

Louis Lau, Partner, Capital Markets Advisory Group, KPMG China, adds:

By deepening the reform of the New Third Board and setting up the Beijing Stock Exchange as the primary platform serving innovation-oriented SMEs, China has shown its commitment to the on-going enhancement of the multi-level capital market in mainland China.

The Hong Kong IPO market posted its strongest Q3 YTD performance in terms of total proceeds, recording 73 deals and raising HKD288.5 billion during the period. Chinese technology companies continue to be the top contributor in terms of funds raised – representing four out of the top 10 IPOs in terms of proceeds. KPMG expects Hong Kong to be among the top listing destinations for these companies in 2021 as new economy companies from mainland China continue to choose Hong Kong.

Irene Chu, Partner, Head of New Economy and Life Sciences, Hong Kong, KPMG China, says:

The recent market consultation on SPACs underlines the exchange's continued efforts to enhance the competitiveness and attractiveness of the Hong Kong capital market. The impending SPAC regime in Hong Kong could become an attractive fundraising channel for high growth, innovative and new economy companies from China and other regions.

Hong Kong continues to be the natural choice for homecomings of US-listed mainland Chinese companies. During the period, two US-listed Chinese electric-vehicle makers completed dual primary listings in Hong Kong, raising a total of HKD29.5 billion, representing 10% of total funds raised for 2021 Q3 YTD. With the strategic benefits such as expanding investor base and mitigating market risks, more homecomings of US-listed mainland Chinese companies are expected.

The biotech sector in Hong Kong has expanded rapidly since a new listing chapter was added in 2018. Solid market sentiment and investor appetite are present in the biotech sector. As of 22 September, there are 56 active healthcare or life sciences applicants in the pipeline, of which 27 are pre-revenue biotech companies.

*Remarks: Analysis based on data as at 22 September 2021

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