Pandemic-induced hunger for IPOs keeps Hong Kong’s investment bankers busy

If a slowdown in listings on the mainland pushes even more firms to Hong Kong, the hub could see a record year, according to a Bloomberg Intelligence analyst

Many firms pushing to sell shares have yet to find a sustainable way to make profits, including Chinese grocery delivery apps such as Meicai and Dingdong Maicai

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An electronic board displays stock figures outside the Exchange Square, the building housing the bourse in Hong Kong. Photo: EPA-EFE

Published: 4:27pm, 17 Mar 2021Updated: 4:27pm, 17 Mar 2021

Hong Kong’s bankers are working around the clock as the region’s companies rush to go public.

Initial public offerings in the city have already hit almost US$11 billion, a close to 500 per cent jump from a year earlier, with video streaming platform Bilibili and search giant Baidu among companies preparing multibillion-dollar deals. Digital roadshows and clients eager to move faster to capture abundant liquidity – especially as market sentiment has begun to sour – means bankers are keeping dawn-to-midnight schedules, say some, even turning down deals where they are relegated to junior roles.

Companies are trying to “get the deal done as soon as they can”, said Stephanie Tang, head of private equity for Greater China at law firm Hogan Lovells. “Many of them see this as an opportunity and if they are not catching the train quickly, they might lose the opportunity.”

A pandemic-induced hunger for technology stocks and the threat of US delistingshave been a boon for the financial hub during a difficult political stretch, driving a surge in initial and secondary share sales. A new push by Shanghai’s Nasdaq-like Star board to more closely scrutinise IPOs along with a pile-up of applications there may drive more of China’s unicorns to Hong Kong, taking listings to a record, Bloomberg Intelligence estimates.

Chinese search engine giant Baidu is among several mainland firms that are preparing to raise funds in Hong Kong. Photo: Bloomberg

Unsurprisingly, the health sector is the busiest, with deals poised for both Hong Kong and the US. Goldman Sachs Group’s health care team is working on at least 20 IPOs in the US$300 million to US$1 billion range. Citigroup has won eight Chinese health care mandates in the three weeks just before Lunar New Year, expecting to raise US$300 million to US$400 million for each in July through September. Citi has also nabbed the WeDoctor IPO, which is seeking to raise as much as US$3 billion at a pre-IPO valuation of US$12 billion. The details were shared by bankers and executives familiar with the deals, who asked not to be named discussing private matters.