PwC has released data reviewing China’s IPO market in first half of 2020, which shows IPO volume and fundraising increased significantly despite the COVID-19 pandemic.
Over 300 IPOs and more than RMB 300 billion in fundraising forecast in 2020
There were 118 new listings and RMB139.3 billion in total funds raised, an increase of 84% and 131% respectively from the previous year. The average fundraising amounts to RMB1.2 billion compared to RMB0.9 billion last year.
Due to a large number of new technology companies listed on the STAR Market, Shanghai Stock Exchange ranked first based on IPO volume (73 IPOs) and ranked second based on funds raised (RMB 111.7 billion) in the global market.
This year, the STAR Market celebrated its 1st anniversary in June, and marks the bourse’s exemplary role in supporting and encouraging listings of “hard technology” enterprises with great success. To date, the number of listed companies on the STAR Market has exceeded 100 and gained a total market value of over RMB 1.7 trillion.
“The STAR Market’s pilot registration system have achieved phased success while the launch of the new securities law and orderly reform of ChiNext Board are conducive to the listing activities of Chinese enterprises. We expect the A-share market will continue to thrive in the second half, with over 300 IPOs and total fundraising to be over RMB 300 billion in 2020,” said Thomas Leung, PwC China Markets Leader.
From an industry perspective, the first half of the year saw the Shanghai main board IPOs account for mainly industrial products, consumer goods and services, while the STAR Market IPOs were mainly from information technology, telecommunications and industrial products.
Shenzhen SME Board and ChiNext IPOs were mainly from industrial products. Compared with the same period last year, few IPOs were from the financial sector. The largest IPO in the first half was the Beijing-Shanghai High-speed Railway which raised over RMB 30 billion.
Hong Kong IPO market to further thrive in second half of 2020
In the first half of 2020, there were a total of 64 new listings in Hong Kong. Total funds raised reached HK$87.5billion, an increase of 22% year on year.
The Main Board showed stronger performance, having record 54 IPOs and HK$87.2 billion of total funds raised. Although the number of companies has decreased by 21%, total funds raised actually increased by 22%. This is mainly due to the fact that two large-scale US listed Chinese companies with a total value of over HK$10 billion came to Hong Kong for a secondary listing.
Within this period, 5 new listings occured on the GEM board, with total funds raised at HK$0.3 billion. Companies seeking IPOs are mainly from retail, consumer goods & services industries and industrial products.
While the COVID-19 pandemic occurred in the first half of 2020, investors paid attention to biotech and new economy companies. PwC estimates that there will be more than 10 successful Biotech enterprise listings on Hong Kong Stock Exchange (HKEX) this year.
PwC predicts 180 IPOs in 2020, including 165 on Main Board, with an estimated total funds to be raised between HK$230 to 260 billion. This level of volume will possibly see the Hong Kong IPO market continue to thrive, with HKEX predicted to once again secure a place in the top three global IPO market rankings.
Reported by Jasmine
Edited by Olivia