HONG KONG (Reuters) – Hong Kong bankers are eyeing a slew of blockbuster IPOs from Chinese language know-how companies with a complete market capitalization of some $500 billion over the subsequent two years, in a pointy distinction to 2017 – the town’s worst yr for elevating fairness in a decade.
If bankers’ expectations are met, it might arrange Hong Kong for a showdown with New York, the normal host for the world’s hottest new-financial system corporations and Hong Kong’s closest rival for the worldwide IPO crown.
Corporations reminiscent of smartphone maker Xiaomi [IPO-XMGP.HK] and wealth administration platform Lufax are amongst these mulling multi-billion greenback listings in Hong Kong subsequent yr, inspired by a late-2017 rush of tech floats.
Bankers estimate Xiaomi’s IPO might worth the corporate at as much as $one hundred billion, whereas Lufax was valued at $18.5 billion in its final funding spherical.
“The expectation is that over the subsequent couple of years there’s in all probability upwards of $500 billion of market capitalization simply within the tech sector in China that would go public,” stated Tucker Highfield, head of fairness capital markets syndicate for Asia Pacific at Credit score Suisse.
Some companies will nonetheless head to New York, whose acceptance of twin-class share buildings is engaging for a lot of know-how corporations. Meituan-Dianping, a Chinese language on-line platform for ordering meals and reserving films, is predicted to decide on New York for a float that would increase $three billion.
However Hong Kong, the world’s largest fairness capital-elevating middle for 4 of the final 10 years, is trying to revive its attraction and this month introduced plans to permit twin-class shares because it tries to draw Chinese language tech listings.
Hong Kong raised $32.eight billion in fairness capital in 2017, Thomson Reuters knowledge exhibits, the bottom since 2008 when fundraising dried up through the international monetary disaster.
Of this, IPOs accounted for $10.9 billion or simply greater than half 2016 ranges, leaving Hong Kong rating fourth globally for 2017, behind the New York Inventory Trade, Shanghai Inventory Change and Mumbai’s Nationwide Inventory Change.
Bankers and buyers stated the dominance of Wall Road within the first half of the yr, when a collection of document closes for benchmark indices grabbed headlines, distracted international buyers from a fair stronger rally in Asian rising markets shares.
Hong Kong’s blue-chip Cling Seng Index .HSI has gained 35 % this yr – its greatest efficiency since 2009. MSCI’s broadest index of Asia-Pacific shares outdoors Japan .MIAPJ0000PUS has risen over 32 %. [MKTS/GLOB]
The town was additionally hit by the timing of some big floats, resembling an IPO of as much as $10 billion by China Tower, the world’s largest assortment of telecoms towers, that was anticipated in 2017 however is now seen occurring in early 2018.
Spurring the present optimism are a collection of current scorching tech floats. China Literature (0772.HK) raised $1.1 billion in November and jumped greater than eighty % on its debut – one of the best opening pop by any huge IPO worldwide this yr.
“The backlog is robust,” stated Aaron Arth, head of the financing group for Asia excluding Japan at Goldman Sachs.
“There are a selection of massive offers more likely to come to market which are backed by robust enterprise dynamics and publicity to China – all at a time when individuals are reallocating to the area,” Arth added.
Fairness-elevating throughout Asia-Pacific slipped 2 % this yr to $236.three billion, its lowest since 2013, as gross sales of further fairness by listed teams fell 14 %.
Morgan Stanley (MS.N), UBS (UBSG.S) and Goldman Sachs (GS.N) led the fairness league tables for the area with $thirteen.6 billion and $12.four billion and $12.three billion of offers to their credit score respectively. Citic Securities (600030.SS) and Citigroup (C.N) rounded out the highest 5.
Reporting by Jennifer Hughes; Modifying by Himani Sarkar