Hong Kong IPO proceeds to hit HKD130 billion in 2017... | KPMG | CN
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Hong Kong IPO proceeds to hit HKD130 billion in 2017, with ‘new economy' listings set to drive growth in 2018...

Hong Kong IPO proceeds to hit HKD130 billion in 2017...

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Hong Kong IPO proceeds to hit HKD130 billion in 2017, with ‘new economy' listings set to drive growth in 2018, finds KPMG analysis

Hong Kong’s IPO market is expected to raise HKD130 billion in 2017, with the emergence of ‘new economy’ IPOs and the anticipated new initiatives around listing reforms likely to boost proceeds to over HKD200 billion in 2018, finds KPMG. 

While the number of IPOs in Hong Kong is forecasted to hit a record high of 160 in 2017, total proceeds are expected to decline to HKD130 billion – the lowest amount since 2012 (HKD90 billion) – due to the lack of sizeable deals. As a result, Hong Kong will be unable to retain its top spot in 2017, after ranking as the largest IPO market worldwide in 2016.  

Maggie Lee, Head of Capital Markets Development Group, Hong Kong, KPMG China, says: “We are starting to see a shift in the major contributors to the IPO market from traditional financial services companies to ‘new economy’ companies related to internet and technology businesses driving new listings in the market.” 

These ‘new economy’ companies focus on technology and internet-related businesses, including e-sports, online automobile financing, online insurance and e-books. Compared to 2016 where there was a lack of large IPOs from companies in ‘new economy’ sectors, four out of the top 10 largest IPOs in Hong Kong in 2017 were companies in these sectors, reflecting a market transformation led by technology companies. Furthermore, the new economy IPOs were heavily oversubscribed, indicating strong investor appetite for these companies.

Lee adds: “The ongoing discussion of listing reform, which may result in changes to the listing rules to attract ‘new economy’ companies, innovation and technology companies, as well as those with non-standard governance structures to list in Hong Kong, will increase the attractiveness of Hong Kong as a IPO destination.”Meanwhile, the A-share market in Mainland China continues to be active, with the IPO approval rate accelerating. KPMG forecasts that the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) will raise a combined RMB235 billion from 440 IPOs in 2017, compared to RMB150 billion from 227 listings in 2016.

Louis Lau, Partner, Capital Markets Advisory Group, KPMG China, says: “Direct financing and multi-tiered capital markets is becoming increasingly important to help companies deleverage and reduce financing costs. Considering the crucial role of IPOs in direct financing, regulators will continue to promote IPO normalisation by speeding up the approval process while maintaining the quality of listing candidates.”

The SSE and SZSE are expected to remain among the top-ranked IPO destinations in 2018 in terms of proceeds. Small to medium-sized companies from the industrials and TMT sectors are expected to be the main focus next year, while listings from the healthcare and life sciences sectors will be new drivers of growth.

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About KPMG China

KPMG China operates in 16 cities across China, with around 10,000 partners and staff in Beijing, Beijing Zhongguancun, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Xiamen, Hong Kong SAR and Macau SAR. With a single management structure across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located. 

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 152 countries and regions, and have 189,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG China was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong office can trace its origins to 1945. This early commitment to the China market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in the Chinese member firm’s appointment by some of China’s most prestigious companies. 

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