Image: Reuters Berita 24 English - China's IPO candidates nearly doubled in June because more Chinese companies wanted to be listed. Th...
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| Image: Reuters |
Berita 24 English - China's IPO candidates nearly doubled in June because more Chinese companies wanted to be listed. There are now almost 1,000 IPO candidates, which is the most in at least three years. This could make China a bright spot for bankers when equity offerings slow down in other markets.
Bankers say that the rush was partly caused by China's decision last month to loosen restrictions on COVID. Those who wanted to go public also rushed to get their applications in by June 30 so they wouldn't have to update them with first-half results, which would have slowed down the process even more.
"Financial data has a shelf life of six months," said a Chinese banker who didn't want to be named because he wasn't allowed to talk to the media. This is why there is usually a rush before June 30 and December 31.
"Also, the COVID outbreaks in the past slowed down a lot of projects," he said, referring to the two-month lockdown of Shanghai because of COVID-19, which ended on June 1.
The $1.71 billion listing of Tianqi Lithium next week in Hong Kong is good news for the city's faltering capital markets, but it is not expected to lead to more deals as long as the world's financial markets are unstable.
"It's a secondary listing in a hot market, like batteries. Before we can say that the IPO market is back, we'll need to see more activity "Reuters heard from a banker working on the deal who did not want to be named.
China's IPO market, which was the biggest in the world in terms of money raised in the first half, will keep going strong in the second half, thanks to its strong pipeline. In the first half of this year, the STAR Market in Shanghai had the most IPOs of any stock exchange in the world.
Most people expect the Swiss agrochemicals company Syngenta to list on STAR Market by the end of the year. This could be China's biggest IPO this year, raising an estimated $10 billion.
Among the others are a planned $1.9 billion share sale by Shanghai United Imaging Healthcare Co. and an estimated $1 billion listing by Megvii, an artificial intelligence (AI) company that has been blacklisted by the U.S.
Both will be on STAR, and they are in the final stages of being checked out.
Investors are also keeping an eye on a possible IPO revival by Jack Ma's Ant Group. Sources told Reuters that China's central leadership has given a tentative green light to the idea. [L1N2XW1T5]
IPO MARKET SPURTS UP
Official data shows that Chinese regulators and stock exchanges accepted 444 listing applications in June alone. This brings the total number of companies hoping to go public to 933.
The number of applications to list on STAR Market, Shenzhen's ChiNext, and the Beijing Stock Exchange, China's three markets that use the U.S.-style registration IPO system, went up by 31% compared to the same time last year.
With Shanghai and Beijing relaxing COVID restrictions and the central government putting out economic stimulus, Felix Fei, a partner at the accounting firm EY, expects China's economy to bounce back in the second half, which will help the IPO market.
KPMG did an analysis of China's IPO pipelines and found that most of them are in innovative and strategic industries like industrial manufacturing, TMT, healthcare, and energy.
Louis Lau, Partner of Capital Markets at KPMG China, said that a possible domestic economic recovery will "create a favourable environment for fund-raising," which may also benefit from an expected expansion of IPO reform in China.
According to KPMG, equity deals were affected by COVID, economic uncertainty, and rising geopolitical tensions. In the first half of the year, IPOs in Shanghai and Shenzhen raised a total of $46.3 billion, which was about half of the global total.
