An increasing number of mainland private enterprises are expected to launch initial public offerings (IPO) in Hong Kong over the next two years, according to industry experts. Economist Wu Jinglian yesterday called on the Chinese Government to improve the fund-raising environment for private enterprises in China. Last year, the number of mainland private investors grew 21.5 per cent, while total investment in private enterprises rose 29.4 per cent. One fund-raising option for Chinese companies is to list on the A-share market in Shanghai. But A-share candidates must wait in line, often for one or two years before receiving regulatory approval. About 20 private enterprises have successfully listed in Hong Kong, Singapore and the United States. Generally, however, Chinese regulatory authorities are reluctant to let private enterprises list overseas because they regard it as a back-door method. But Joe Zhang, head of China research at UBS Warburg, said yesterday: 'I'm confident the Chinese Government will allow them to come to the IPO market.' There would not be a lack of private Chinese companies from all industries clamouring to list overseas, he said: 'Today, if the government says, 'We give you just an open permission to go public', I would not be surprised if we suddenly see 300 private chip companies come to the Hong Kong market or Singapore market or US market.' He said that besides raising funds to expand their operations, many Chinese companies went overseas for an IPO to raise their profile for marketing purposes. For the next two years or so, Mr Zhang expects most Chinese private enterprises listing outside the mainland to choose Hong Kong for their IPOs. 'They are more interested in the Hong Kong market. Very simple. The analysts are here, fund managers are here,' he said. At the beginning of this year, UBS Warburg created the UBS Warburg Private Chips Index, comprising 12 Chinese private companies listed overseas. Most are listed in Hong Kong. Nasdaq-listed UTStarcom and AsiaInfo account for about half the UBS Warburg P-share index. Singapore-listed People's Food Holdings and United Food Holdings are also part of the P-share index. The P-share index includes the Growth Enterprise Market stocks Greencool Technology, Xinao Gas, Wah Sang Gas and Phoenix Satellite TV, and the Hong Kong main-board stocks Chaoda Modern Agriculture, China Rare Earth, Euro-Asia Agricultural and Global Bio-chem Technology. The P-share index has risen 57 per cent this year, beating not only the Hang Seng but also the Red Chip Index and H-share index, which are filled with mainland state-owned enterprises. UBS Warburg will recalibrate the index next month and raise the number of constituent stocks from 12 to 18 Chinese private enterprises.