Mainland China and Hong Kong have most active IPO year since 2011, according to KPMG analysis
Hong Kong and Shanghai among the top three in 2020 for IPO fundraising
HONG KONG, Dec. 10, 2020 /PRNewswire/ -- Mainland China and Hong Kong stock exchanges are set to record their most active year since 2011 in terms of proceeds, according to KPMG's latest analysis of mainland China and Hong Kong's IPO markets. The Shanghai and Hong Kong bourses, which saw a surge in fundraising activity, were key drivers behind the 23 percent increase in proceeds raised in the global IPO market in 2020, despite continued challenges due to COVID-19.
The analysis, from KPMG's 2020 review of the Mainland China and Hong Kong IPOs and other market trends, shows that in terms of global ranking by expected IPO proceeds for the full year of 2020 up to December 31, the Hong Kong Stock Exchange (HKEX), Shanghai Stock Exchange (SSE), and Shenzhen Stock Exchange (SZSE) will claim the second, third and fifth places respectively, with total funds raised reaching USD 50.3 billion, USD 49.9 billion and USD 18.5 billion respectively.
Paul Lau, Partner, Head of Capital Markets, KPMG China, says: "Despite prevailing uncertainties marked by the COVID-19 outbreak as well as political, social and economic concerns, the global IPO markets remained resilient and ended strong in 2020. As businesses gradually adapt to the new normal and with the rollout of COVID-19 vaccines, there is a good chance for the global economy as well as the capital markets to rebound in the coming year."
Over the course of 2020, the SSE combined with SZSE are expected to see a 82 percent increase in terms of funds raised compared with 2019 - recording a combined RMB 461.0 billion from 383 new listings. The strong performance is backed by the continuing popularity of the STAR Market, which has contributed 47 percent of the funds raised in the A-share market during the year, driving the SSE to rank among the global top 3 exchanges in terms of total funds raised.
HKEX meanwhile has seen a 24 percent increase in terms of funds raised - raising a total of HKD 389.9 billion from the 140 IPOs expected to complete by year-end. The increase in fundraising is mainly attributable to homecoming listings, amounting to approximately 34 percent of the funds raised, which is benefiting the city's financial industry and the capital market.
Shanghai and Hong Kong also secured the top three largest global IPOs during the year. Semiconductor Manufacturing International Corp. raised USD 7.5 billion on the SSE's STAR Market, followed by JD.com on the HKEX with USD 4.5 billion and Beijing-Shanghai High Speed Railway Co., Ltd. in Shanghai with USD 4.4 billion.
Louis Lau, Partner, Capital Markets Advisory Group, KPMG China, adds: "The A-share market had a deepened capital market reform with the expansion of registration-based IPOs this year amid China's focus to foster a multi-level capital markets system. This would further increase market inclusiveness and coverage, assisting companies of different sectors to meet their funding demands, and further bolstering the real economy as a whole."
In Hong Kong, the ecosystem has further cultivated the development of and fundraising for healthcare and life sciences companies, with the city already boasting the largest in Asia and the second-largest biotech IPO market in the world. During the year, 22 healthcare/life sciences companies have been listed, raising a total of HKD 98.8 billion, contributing 25 percent of total funds raised. Out of these companies, 14 pre-revenue biotech companies were listed under Chapter 18A, raising an aggregate of HKD 41.1 billion.
Irene Chu, Partner, Head of New Economy and Life Sciences, Hong Kong, KPMG China, comments: "Benefiting from the new listing chapter launched in 2018, Hong Kong has been serving strong investor demand for high quality healthcare listings such as companies engaged in research and development of cancer treatments, autoimmune disease treatments, medical devices, etc. Following the strengthened ecosystem in Hong Kong with more biotech-experienced investors, investment bankers, lawyers, research analysts and financial advisers, we expect more companies to follow suit in the coming year."
In terms of sectors, TMT and advanced industrials comprise 65 percent of the A-share IPO pipeline and are expected to remain key drivers force in this market. For Hong Kong, the trend of homecoming and biotech listings is seen as a stimulus for change in the composition of Hong Kong's market, moving from traditional real estate and financial services based to New Economy listings, such as technology, biotech and e-commerce.
Although current global uncertainties are expected to continue into 2021, KPMG remains optimistic about the Hong Kong IPO market. Hong Kong will continue to be one of the leading listing destinations next year, driven by the growing ecosystem of innovative and New Economy companies. The market is forecast to raise a total of HKD 350-400 billion in 2021 from around 130-150 IPO deals.
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 27 offices across 25 cities with around 12,000 partners and staff in Beijing, Changsha, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Haikou, Hangzhou, Hefei, Jinan, Nanjing, Ningbo, Qingdao, Shanghai, Shenyang, Shenzhen, Suzhou, Tianjin, Wuhan, Xiamen, Xi'an, Zhengzhou, 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 147 countries and territories and have more than 219,000 people working in member firms around the world. The independent member firms of the KPMG global organisation are affiliated with KPMG International Limited ("KPMG International"), a private English company limited by guarantee. KPMG International and its related entities do not provide services to clients. 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 multidisciplinary services (including audit, tax and advisory) by some of China's most prestigious companies.