There should be a strong pick-up in funds raised through initial public offerings (IPOs) in Hong Kong this year after a disappointing last year, according to consultancy Arthur Andersen. The consultancy predicts that funds raised through IPOs could reach HK$100 billion this year, with between 75 and 100 new companies being listed. Last year, the funds raised by 88 IPOs on the main board and second board was HK$25.4 billion - an 80.7 per cent drop from the previous year. If other equity fund-raising activities were included - such as placements and right issues - the amount raised last year would be HK$60 billion. This is only about half the funds raised on mainland stock markets. The Shanghai and Shenzhen markets raised 119.2 billion yuan (about HK$111.67 billion) last year, down 22.72 per cent from 2000. Due to the continuous sluggish performance of global stock markets, the offer prices last year were among the lowest on record, said Kennedy Liu Tat-yin, a partner of Andersen's Assurance. On the main board, about 60 per cent of new listings were priced at a price-earnings multiple below 7.5 times, while on the second board, about 90 per cent either had no profit or a price-earnings multiple above 7.5. 'We expect the IPO market to be more active this year, especially from the second quarter,' Mr Liu said. The size of offerings would be substantially higher than last year, he said. 'If we can see three or four mega-IPOs, we will easily see the funds exceed HK$100 billion.' Last year, the offering of CNOOC - China's largest offshore oil producer - alone raised HK$11 billion, accounting for 43.3 per cent of all funds raised. Market watchers are expecting several big IPOs put on hold last year, including that of China Telecom, Bank of China and Standard Chartered Bank, to progress this year if market sentiment turns around. Arthur Andersen's optimism on the outlook for the SAR's IPO market is on the back of strong growth in its hinterland. A rebound in the global economy would be another boost. 'Driven by the robust outlook prompted by China's entry into the World Trade Organisation, Hong Kong's IPO activities will stage a comeback in 2002,' Mr Liu said. 'China will continue to need a substantial amount of capital for its sustained economic restructuring and reforms.' He believed Hong Kong would continue to serve as the premier fund-raising centre for China, especially with the yuan still not fully convertible. Mr Liu projected at least 75 per cent of the funds to be raised via IPOs this year to be generated by big offerings from mainland companies. Last year, 11 mainland companies - including three red-chip and eight H-share companies - raised HK$18.14 billion from primary offerings. That was about 71.4 per cent of all funds raised last year. Mr Liu believed that state-owned and private companies from China would continue to be major contributors to the SAR's IPO market. The consultancy also predicted that more sizeable and better quality companies would be listed this year. The two-year-old Growth Enterprise Market (GEM) would attract the majority of new listings as there was a large pool of young companies, especially in China, looking for financing channels, Mr Liu said. Of the 88 new companies listed last year, 57 were listed on GEM, while 31 were listed on the main board.