Hong Kong IPO proceeds to reach up to HKD 150 billion in 2017, with TMT listings on the rise, KPMG forecasts

HK IPO proceeds to reach up to HKD 150 billion in...

Mainland China IPO market to raise RMB230 billion from 440 IPOs, education companies a likely new source of growth


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Hong Kong IPO activity is expected to accelerate in the fourth quarter of 2017, with about 80 companies looking to list and total proceeds likely to reach up to HKD 150 billion for the full year, KPMG forecasts.

There were a total of 106 IPOs in Hong Kong in the first three quarters of 2017*, an increase of 56 percent from the 68 deals recorded over the same period in 2016. According to KPMG analysis, total proceeds totalled HKD85.0 billion, 37 percent lower than the year-on-year total. 

The infrastructure and construction sectors dominated the IPO market in terms of the year-to-date number of listings, while the financial services industry continued to be a major contributor in terms of funds raised.  

Maggie Lee, Partner, Head of Capital Markets Development Group, Hong Kong, KPMG China, says: “Hong Kong is expected to play a greater role in attracting technology companies to list, as both the mainland China and Hong Kong governments are taking a number of initiatives to promote development in this area. Hong Kong is an ideal platform for these technology companies to raise funds.” 

More than 10 TMT companies, including online-retailers, web-based game developers and IT solutions providers, are preparing to list in Hong Kong in the fourth quarter of 2017. In comparison, only three TMT companies listed between January and September, KPMG analysis shows.

“With the first China fintech company listing in Hong Kong, we believe this could trigger interest from other fintech companies to consider listing in the city in the longer term. Meanwhile, regulators are currently studying the design and operational framework for weighted voting rights, which could facilitate the listing of ‘new economy’ companies,” Lee adds. 

In the A-share IPO market, performance remained strong in the third quarter, with the total year-to-date funds raised reaching RMB 172.9 billion from 346 offerings. This figure already exceeds the total proceeds of RMB 149.6 billion from 227 listings recorded in the full year of 2016 in Mainland China. 

Offerings from the industrials and TMT sectors are expected to drive the number and total value of IPOs in the A-share market. This is in line with the government’s ongoing effort to promote high-end manufacturing and innovation and technology. 

In addition, the education sector is likely to be a new source of IPOs in the longer term.

Louis Lau, Partner, Capital Markets Advisory Group, KPMG China, says:  “China’s new law on the private education system, which took effect on 1 September, allows for-profit private education institutions to register in China. This opens the door for companies in the education sector, which previously could not access the profit prerequisite for listing.”

With an average of eight to ten new listings taking place in the A-share market every week, KPMG forecasts about 440 IPOs to take place in Mainland China in 2017, raising a total of RMB 230 billion, 54 percent higher than in 2016.

*Note: All 2017 Q3 figures are based on a combination of data (as at 15 September 2017) and KPMG projections


About KPMG China

KPMG China operates in 16 cities across China, with around 10,000 partners and staff in Beijing, Beijing Zhongguancun, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Xiamen, Hong Kong SAR and Macau SAR. With a single management structure across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located. 

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In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG China 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 office can trace its origins to 1945. This early commitment to the China market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in the Chinese member firm’s appointment by some of China’s most prestigious companies. 

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