Miners may ramp up IPO activity
PwC sees potential for an increase in number of share offers by resource firms in Hong Kong
Initial public offerings by resource and mining companies could rebound this year, PricewaterhouseCoopers says.
The firm expects 10 to 15 such companies to list in Hong Kong and raise HK$20 billion to HK$30 billion this year.
"Although market conditions in 2012 were challenging, it was clear Hong Kong has become a listing hub for big players who were ready to mine proven reserves and help meet China's insatiable demand for resources," said Tim Goldsmith, the firm's global mining leader.
PwC said the smooth leadership transition in Beijing and economic growth fuelled by an expanding middle class should drive positive market sentiment in the medium to long term.
The number of IPOs in the sector has dwindled since 2010, when there were 17. There were 11 in each of 2011 and 2012.
"Last year, IPOs were down to their 2009 level; the credit markets were going through significant structural changes. The decline of bank loans on the back of banks deleveraging as well as preference for bonds have led to IPOs being as good as dead last year," Goldsmith said.
In view of this, PwC Hong Kong mining leader and assurance partner Benson Wong said that since 2009, Hong Kong Exchanges and Clearing had made an effort to make the city one of the top listing destinations for resource and mining firms.
The introduction of new listing rules by HKEx in June 2010 was aimed to attract firms from countries outside the mainland, such as Mongolia. Secondary listings in the city are becoming more popular for major mining companies, with Glencore International's listing in 2011.
"Once confidence in the equity markets is restored, Hong Kong will establish its position as a global listing hub for miners and natural resource companies," Wong said.
PwC said outbound mergers and acquisitions by mainland firms to obtain resource and mining assets overseas remained high. Last year, the value of outbound deals by state-owned firms in the energy and power sector rose to US$36.2 billion from US$23.1 billion in 2011.
It also highlighted growing activity of private-sector buyers acquiring industrial technologies and consumer-linked businesses overseas, with many deals aimed at bringing advanced Western know-how and brands back for use in the domestic market.