Chinese financial firms grab bigger share of Hong Kong IPO deals
With large-size IPOs shrinking globally, international investment banks are under pressure and will put more focus on M&A deals
Foreign investment banks are facing more difficulties in winning initial public offering deals in Hong Kong amid the rise of smaller mainland Chinese and local rivals as well as the scarcity of big IPOs in the city.
In 2016, Morgan Stanley saw its number of sponsored Hong Kong IPOs drop to six, compared with 10 the year before, although it still ranks No 1 among investment banks in Hong Kong for the two year period, according to data from Phillip Securities. Deals for Goldman Sachs fell from six to five over the same time.
China’s Guotai Junan Capital, however, sponsored eight Hong Kong IPOs in 2016 compared with six deals in 2015, taking No 2 spot for the two year period.
Hong Kong-based Ample Capital saw the number of IPOs it sponsored surge to seven in 2016 from three a year earlier, ranking at No 6.
In terms of underwritten deals, mainland-backed BOC International, Haitong International, CCB International, CMB International and ABC International dominated the top five for 2016, with Morgan Stanley in sixth place for last year, according to data from Bloomberg.
Ringo Choi, Asia-Pacific IPO Leader at auditing firm EY, said Chinese financial firms are becoming more competitive and will continue to grab share from foreign firms in Hong Kong’s IPO market.
“Chinese companies seeking a mid-size IPO tend to look for sponsors with a China background, partly because they already have cooperation in the mainland market, such as in the financing and investment business,” Choi said.