Hong Kong to rank top again this year for global IPOs, raising HK$220 billion, PwC predicts
The accounting giant believes a new board for technology firms is needed, as only 3 per cent of funds raised at IPO in 2016 were in that sector
Hong Kong will continue to rank top globally for initial public offerings in 2017, with 130 companies raising up to HK$220 billion, according to accounting firm PwC.
The estimate, published on Tuesday, is 13 per cent higher than last year’s total and would represent a turnaround after 2016 saw funds raised from IPO plunge 26 per cent from the previous year. Despite the drop, Hong Kong retained the No.1 spot for a second consecutive year.
Eddie Wong, a partner at PwC Hong Kong’s capital markets services, said the estimate did not include several potential mega IPOs of payment service providers and ‘new economy’ firms as their listing timetables and venues have not yet fixed. He did not identify these companies but brokers said Ping An Insurance’s peer-to-peer lending arm Lufax and Alibaba’s online payment company Alipay were likely to launch IPOs.
“If these mega technology companies would decide to list in Hong Kong this year, the IPO funds raised would be much higher,” he said.
Only 3 per cent of funds raised from IPO in Hong Kong last year were by technology firms, compared to 69 per cent by financial firms. Wong said that trend will continue this year and called for a new board for technology companies.
“There is a need to launch a new board traded by professional investors. If the new market is not traded by retail investors, the rules can be more flexible to meet the needs of start-ups or mega technology firms to list in Hong Kong,” Wong said.
Alibaba Group Holdings’ founder Jack Ma said in November that Hong Kong must reform its listing rules to attract new-economy businesses, and said he would only list Alipay in Hong Kong if the city was ready. Alibaba owns the South China Morning Post.
Alibaba chose to list its shares in New York in 2014, in a world record-breaking US$25 billion IPO. The choice of New York followed Hong Kong’s refusal to allow dual-share listings, a structure incorporating shares with unequal voting rights.
PwC is also positive about IPOs in the A-shares markets in Shanghai and Shenzhen. It expects the two bourses to raise a combined 220 billion to 250 billion yuan in 2017, up 51 per cent to 66 per cent from HK$167.8 billion last year, which was low because China had suspended IPOs for some months.
