Hong Kong’s IPO market is set to be the largest in the world in 2018, boosted by rescheduled offerings from last year and an expectation that listing reforms in the city will lure more companies.
The analysis by global consulting company PwC expects 150 companies to list in Hong Kong during 2018, raising between HK$200 bn ($25.6 bn) and HK$250 bn. This compares with a record 174 listings on the stock exchange’s main board and the growth enterprise market board for smaller companies in 2017.
Total funds raised last year came in at HK$128.2 bn, 34 percent lower than 2016, hurt by a lack of ‘mega-sized’ IPOs, PwC notes. This saw Hong Kong lose its IPO crown to New York.
PwC also cites some large-scale offerings being rescheduled for 2018 as a reason for the 2017 decline. The consulting firm expects that raising the main and growth enterprise market board’s market capitalization thresholds will help define the position of the two boards more clearly.
‘We believe the proposed dual-class share structures will help the Hong Kong market to attract new economy enterprises to Hong Kong for fundraising and enhance the diversification of Hong Kong’s capital market,’ says Benson Wong, entrepreneur group leader for PwC in Hong Kong, in a statement accompanying the analysis.
Last month, Hong Kong’s stock exchange said companies with a market capitalization of at least HK$10 bn will be eligible to list shares with different voting rights. This followed an invitation from the exchange in June for views on a proposal for a new board that would allow dual-class share structures.
In 2017, four of the 10 largest IPOs in Hong Kong were from so-called ‘new economy’ companies, which are focused on technology and internet-based business. Wong expects about 40 percent of the IPOs in 2018 to be from new economy companies, but he observes in the PwC statement that there won’t be ‘a lot’ of companies with dual-class share structures listing this year, with more expected in 2019.
In September 2017 online insurer ZhongAn Online P&C Insurance raised $1.5 bn from an IPO, while Tencent Holdings’ online publishing unit China Literature’s $1.1 bn offering was many times oversubscribed in November.