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Hong Kong remains one of the world’s top listing destinations, finds KPMG analysis
Listings from advanced industrials, TMT and healthcare/life sciences sectors take centre-stage
Listings from advanced industrials, TMT and healthcare/life sciences sectors take cen...
9 December 2021, Hong Kong – Initial public offerings on Mainland China’s A-share markets are expected to generate record high proceeds of RMB565 billion from 495 deals this year, while the Hong Kong bourse remains a popular destination for new listings as the overall economy continues to rebound.
Proceeds from new listings in Hong Kong are expected to reach HKD356 billion from around 110 deals this year. Taken together, the number of IPOs in the Mainland China and Hong Kong accounted for 25% of the global total, according to KPMG’s latest analysis.
KPMG’s 2021 Q4 review of the Mainland China and Hong Kong IPO markets, shows that there is solid demand for fundraising in the A-share markets with the IPO pipeline remaining strong as active applications currently exceed 770. Buoyed by innovative companies, including both homecoming listings and biotech listings, the Hong Kong market maintained a high level of funds raised compared to its performance over the past decade. The Main Board IPO pipeline stands at a high level, with over 170 companies applying to list, indicating continued interest from issuers seeking to IPO. In terms of total IPO proceeds, the Shanghai Stock Exchange ranks third among the top 5 stock exchanges globally, followed by the Hong Kong Exchange and the Shenzhen Stock Exchange.
Paul Lau, Partner, Head of Capital Markets and Professional Practice, KPMG China, says:
The pandemic has resulted in an increased focus by governments and corporates on sustainable solutions. This has led to accelerated growth in listings for renewable energy, electric vehicles and other companies involved in sustainable innovation. Despite ongoing economic uncertainties, opportunities to channel much-needed funds into these fast-growing companies lie ahead for the capital market. This will continue to drive fundraising activities for the coming year.
Globally, TMT, Industrials and Healthcare/ Life Sciences are the top sectors, contributing over 69% of total funds raised in the US, Hong Kong and A-share IPO markets. In Hong Kong, these three sectors accounted for 73% of all listings, with TMT (38%) continuing to be the most active sector, followed by Healthcare/ Life Sciences (23%) and Industrials (12%). Significant homecoming listings include five Chinese technology companies that completed secondary listings and two US-listed Chinese electric-vehicle makers that undertook dual primary listings in Hong Kong this year. For Biotech listings, the number increased from 17 in 2020 to 30 this year, signalling solid market sentiment and a growing ecosystem in the sector. Total funds raised from biotech listings in Hong Kong reached HKD70.5 billion, representing 20% of the total funds raised in 2021.
In Mainland China, Industrials (28%), TMT (26%) and Healthcare/ Life Sciences (15%) are the most popular sectors in terms of funds raised. This reflects further expansion of advanced industrials, along with the sizeable listing of a state-owned TMT company and ongoing government support for and flexibility of pre-profit biotech companies. Together, the TMT and advanced industrials sectors comprise 67% of the A-share market pipeline.
Additionally 71 companies were transferred from the New Third Board to the newly-launched Beijing Stock Exchange this year. The bourse, which started operating on November 15 to facilitate fundraising of innovative small and medium-sized companies, has already attracted 11 IPOs.
Louis Lau, Partner, Capital Markets Advisory Group, KPMG China, says:
The launch of the Beijing Stock Exchange will enhance the diversity of the multi-level capital market in China. The quality of listings will also remain a priority for the regulator as it looks to enhance the overall market and aims for high-quality economic development in the long run.
Meanwhile, the number of SPAC (special-purpose acquisition company) IPOs in the United States has seen a more than two-fold increase to 522 this year, raising USD143.7 billion and marking a 73% surge from 2020. The SPAC market had slowed in April, however it has rebounded since October following the adoption of the latest disclosure guidance. The Hong Kong bourse also announced plans this year to allow SPAC listings.
Irene Chu, Partner, Head of New Economy, Head of Life Sciences, Hong Kong, KPMG China, concludes:
As an international financial centre, we see continuing efforts to enhance Hong Kong’s listing framework and adapt to the latest market developments. In order to sustain Hong Kong’s attractiveness to issuers and investors in China and other regions, we expect the new SPACs regime will pave the way for further reforms of Hong Kong’s capital markets.
KPMG expects Hong Kong to continue as one of the key IPO destinations globally. The market is forecast to raise between HKD 400-450 billion in 2022 from around 100-120 deals.
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