Listings of Evergrande Property Services, JD Health poised to push Hong Kong’s funds raised via IPO to 10-year high

With US$39.2 billion raised so far, the flotations due to kick off in this week would almost certainly make this the city’s best year since 2010 when US$57.5 billion was raised

JD Health, the health care unit of JD.com, is seeking up to US$4 billion and will kick off its public offering this week, sources say

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A doctor at JD Health, which is looking to raise between US$2 billion and US$3 billion. Photo: JD.com via AP Images

Published: 2:30pm, 23 Nov 2020Updated: 10:15pm, 23 Nov 2020

The initial public offerings of Evergrande Property Services and JD Health, both due to kick off this week, look set to push the total funds raised on the Hong Kong stock exchange to a 10-year high.

Deal arrangers are rushing to launch share sales in the remaining few weeks of 2020, a year characterised by fewer but more sizeable deals as investors chase Chinese issuers operating in the only country in the world forecast to post growth this year amid the global pandemic.

“While revenues at our China companies have been growing over each of the last six to seven quarters, companies with European and US operations had seen revenues drop by over 50 per cent since the second quarter,” said Eric Xin, managing partner at private equity firm Citic Capital Partners, at an industry forum last week. “I don’t see the bottom of it.”

If they hit their targets, the IPOs of both Evergrande Property Services and JD Health would be in the top five biggest deals of 2020.

So far this year the total funds raised via Hong Kong IPOs stand at US$39.2 billion from 125 deals, up 70 per cent from the US$23 billion generated by 136 flotations during the same period a year ago, data from Refinitiv shows. The two forthcoming deals combined are to take the total past the US$40.4 billion raised last year, and would make 2020 the highest year since the US$57.5 billion raised in 2010.

Evergrande Property Services, the property management arm of the heavily indebted China Evergrande, is marketing its Hong Kong IPO at HK$8.5 to HK$9.75 per share in a deal that could see it raise up to US$2 billion, according to its prospectus filed on Monday.

It is selling a total of 1.62 billion shares, and the price range is equivalent to a forward 2021 price-to-earnings multiple of 20.5 times to 23.5 times.

For the six months to the end of June this year, Evergrande Property Services’ net profit totalled 1.15 billion yuan (US$180 million), more than double the 407.3 million yuan it made in the same period a year ago.