KPMG’s analysis and review of the mainland China and Hong Kong IPO markets in 2019 Q1
The Hong Kong IPO market saw a steady performance in 2019 Q1, underpinned by the continuation of new economy companies going public. Meanwhile, the introduction of the Science and Technology Innovation Board (“new tech board”) in Shanghai is set to spur A-share activity, KPMG’s analysis finds.
Based on a combination of data as of 15 March 2019 and KPMG estimates, 36 companies raised a total of HKD 19.9 billion in 2019 Q1 in Hong Kong. In the Main Board, the number of IPOs was 31 with proceeds at HKD 19.5 billion. Seven new economy companies – in technology, media and telecoms (TMT) (4), healthcare/life sciences (2) and education (1) – contributed over 42 percent of the total funds raised.
For the A-share market, listing rules and regulations of the new tech board are already in place with listing applications coming through gradually. Listings are likely to be completed in summer or autumn.
Five of the top 10 largest IPOs in Hong Kong recorded in the quarter were new economy companies, including two pre-revenue biotech firms, KPMG’s analysis finds. This reflects the extended listing momentum of the sector, as five pre-revenue biotech companies went public in 2018 after the new listing regime launched in April last year. The other new economy firms among the top 10 in 2019 Q1 included two from TMT and one from education.
The emergence of IPOs for new economy companies diversified the business sectors in terms of proceeds contributions. While infrastructure/real estate companies dominated in terms of funds raised, their proportion decreased to 19 percent from 45 percent a year ago. TMT and healthcare/life sciences both accounted for 18 percent in 2019 Q1, compared to less than six percent each for the same period last year.