Hong Kong tops global IPO market in 2019 spurred by mega-sized deals, according to KPMG China
New Economy and international listings expected to drive local IPO activity in 2020
HONG KONG, Dec. 11, 2019 /PRNewswire/ -- The Hong Kong bourse once again ranked first globally in terms of IPO proceeds, at a time of global uncertainties, cementing its position as the world's leading IPO hub, according to KPMG's IPO markets 2019 review report.
By the end of 2019, Hong Kong will have completed 160 IPOs, raising a total of HKD 307.8 billion, with a historical high of 145 new Main Board listings, a considerable increase from 130 in 2018. The fundraising total in 2019 was largely driven by a strong performance in the second half of the year, highlighted by two mega-sized deals: Alibaba's secondary listing and the listing of Budweiser Brewing Company.
Paul Lau, Partner, Head of Professional Practice and Capital Markets, KPMG China, said: "Hong Kong continues to be the top IPO destination, with mega-sized listings by Alibaba and Budweiser indicating that the local bourse remains highly attractive to Chinese and international companies. This is despite global IPO markets seeing a slight decrease in proceeds and investors being more cautious with their sector selection amid increased economic uncertainty, reflected in the scaling back in IPOs from higher risk sectors globally this year."
TMT and unicorn IPOs gain momentum
The new listing regime in Hong Kong made it possible for IPOs by pre-revenue biotech companies and Alibaba, the first secondary listing with a weighted voting rights (WVR) structure. TMT claimed the top position in terms of funds raised by sector in Hong Kong, due to the Alibaba offering. This deal alone represented 33 percent of total funds raised in the Hong Kong IPO market during the year.
Irene Chu, Partner, Head of New Economy and Life Sciences, KPMG China, said: "The successful secondary listing of Alibaba may prompt other mega-sized Chinese technology companies currently listed overseas to consider returning to Asia through a similar secondary listing in Hong Kong. We've also seen a surge of New Economy 'unicorns' in the last few years, many exiting through IPOs, paving the way for more opportunities."
Boosted by Budweiser's listing, the consumer market is ranked second both in terms of total funds raised by sector and number of new listings. The Healthcare/Life Sciences sector is ranked third and gradually established its presence in the Hong Kong IPO market, raising a total of HKD 38.5 billion. Nine pre-revenue biotech companies will have listed through the new listing regime by the end of 2019, totalling HKD 15.4 billion.
STAR Market continuing to stimulate A-share IPO market
Fundraising in the A-share market is at its highest level since 2011, with a combined RMB 251.9 billion raised from 200 new listings by the end of 2019. This amounted to an increase of over 80 percent compared to the previous year, primarily due to the debut of the STAR Market, which brought some larger-sized IPOs to the market. The total number of IPOs in the STAR Market steadily increased to 70, with total funds raised amounting to RMB 81.7 million in 2019, representing 32 percent of total funds raised in the A-share IPO market.
Louis Lau, Partner, Capital Markets Advisory Group, KPMG China, noted: "Shenzhen's ChiNext board is expected to apply a registration-based reform following the Star Market's success, enhancing the diversity, transparency and competitiveness of the Chinese capital market. This measure would encourage more technology companies to raise funds in the A-share stock market."
The STAR Market will continue to be a key driver of the A-share IPO market in 2020, supported by a solid pipeline of 87 companies seeking to list as of 8 December 2019, as well as an expected steady flow of new applicants for the near future. The STAR Market will also likely benefit from MSCI's decision to include the market's eligible equities in its indices, given that these can be traded under the Stock Connect programme.
Healthy pipeline supports IPO activities in 2020
The Hong Kong IPO market is poised to stay competitive in the coming year. As at 8 December, the healthy pipeline of 140 active Main Board applicants indicates positive market sentiment. New Economy and international listings are expected to be key drivers in the coming year, leading to a forecasted fundraising total of HKD 300 billion in 2020.
About KPMG China
KPMG member firms and its affiliates operating in mainland China, Hong Kong and Macau are collectively referred to as "KPMG China". KPMG China is based in 23 offices across 21 cities with around 12,000 partners and staff in Beijing, Changsha, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Haikou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Wuhan, Xiamen, Xi'an, Zheng Zhou, Hong Kong SAR and Macau SAR. Working collaboratively 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 153 countries and territories and have 207,000 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 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 firm can trace its origins to 1945. This early commitment to this market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in KPMG's appointment for multi-disciplinary services (including audit, tax and advisory) by some of China's most prestigious companies.