Is money fleeing Hong Kong? Not according to the initial public offerings dipping into one of Asia’s deepest capital pools

The city has hosted two IPOs of more than US$1 billion since early June: Budweiser’s US$5 billion offering in September, and ESR Cayman’s US$1.45 billion this month

Companies have raised US$18.6 billion in the city so far this year, ranking Hong Kong behind New York Stock Exchange and Nasdaq globally

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Budweiser Brewing Company APAC Limited’s chief executive officer Jan Craps (left) and the company’s executive director Frank Wang striking a ceremonial gong during the September 30 listing ceremony at the Hong Kong Stock Exchange. Photo: Bloomberg

Published: 11:10am, 24 Oct 2019Updated: 11:10am, 24 Oct 2019

Hong Kong may have been seeing money flow out as the city’s turmoil undermines its reputation as a stable financial centre, but one important source of capital keeps on coming: cash for initial public offerings.

The city has hosted two IPOs of more than US$1 billion since early June and ESR Cayman is testing investor appetite for a revived share sale of as much as US$1.45 billion.

The Hong Kong-based warehouse operator, which is backed by Warburg Pincus and Goldman Sachs, delayed its IPO in June citing unfavourable market conditions. It has now increased its fundraising target from US$1.24 billion.

ESR is the second company to resuscitate a flotation since June, when large-scale protests started to affect Hong Kong. Budweiser Brewing Company APAC completed a US$5 billion offering last month, having shelved its sale in July amid lacklustre demand. The Asian unit of Anheuser-Busch InBev almost halved the size of the IPO from a planned US$9.8 billion. The stock has risen 15 per cent since it started trading at the end of September.

While Hong Kong has slipped from being the world’s largest IPO venue last year, it’s still running in third place in 2019 behind the Nasdaq and New York exchanges, with companies having raised US$18.6 billion in the city, according to data compiled by Bloomberg. That testifies to Hong Kong’s enduring strength as a capital-raising hub, an advantage that won’t easily be prized away by any regional rival.

The bottom line for companies such as ESR is that they have few other choices. Hong Kong has Asia’s deepest stock market bar Tokyo, where investors are mostly domestically focused and few foreign companies opt to list.

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