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Hong Kong in pole position to attract more health care listings, but needs to lure more techs

Health care company IPOs represented a buoyant 12 per cent all of new funds raised in Hong Kong

PUBLISHED : Monday, 09 January, 2017, 2:29pm
UPDATED : Monday, 09 January, 2017, 10:34pm

Hong Kong needs to attract more health care and biotechnology and other technology firms to its initial public offering market, to diversify the city’s mix of listed stocks, according to global law firm Baker McKenzie and consulting giant PWC, in two separate reports.

Among the HK$194.8 billion of funds raised through IPO last year in Hong Kong, just 3 per cent were by technology firms, compared to 69 per cent by financial firms, according to a report from PwC last week. But Healthcare company IPOs represented a buoyant 12 per cent all of fund raised.

Hong Kong, in fact, ranked as the world’s second largest market when it comes to health care company flotations last year, with eight raising a total of US$3 billion, after London Stock Exchange which raised US$4 billion from six healthcare listings.

Nasdaq ranked third with 39 healthcare listings worth US$2.4 billion, new figures from Baker McKenzie show.

Its report cautions Hong Kong’s ageing population may have led to many social problems needing to be solved, but it also brings huge opportunities for the health care market, both in Hong Kong and in the mainland.

As people are living longer nowadays, the need for all types of medical and nursing home care is booming, and that burgeoning market demands a huge amount of funds, with the stock market the most obvious source.

Interest in health care investment is actually a global phenomenon, with many populations ageing, which led companies in the sector to raise US$18 billion via IPO worldwide last year, a 7 per cent rise.

Among the biggest names was Samsung Biologics, a biopharmaceutical manufacturer of a wide range of products such as vaccines, blood and blood components listed on the Korea Exchange in November, which raised US$2 billion.

ConvaTec, an US global medical products and technologies company focused on therapies for the management of chronic condition, raised US$ 2 billion in London – the largest European healthcare company to float in the city in 23 years.

Although Hong Kong has retained the title as the world’s largest IPO market worldwide for the past two years, it still faces criticism for its lack of diversification.

But observers say Hong Kong Exchanges and Clearing needs to work harder to compete for more health care and biotechnology firms.

Among the HK$194.8 billion raised last year in Hong Kong, just 3 per cent were by technology firms as a whole, compared to 69 per cent by financial firms, according to PwC’s figures.

Healthcare companies’ IPOs represented about 12 per cent all of funds raised, which is still much lower than the financial firms, but higher than the techies.

Health care firm China Resources Pharmaceutical, which raised HK$15.1 billion in Hong Kong, was the second largest IPO last year after Postal Savings Bank which raised HK$59.2 billion.

HKEX chief executive Charles Li Xiaojia has vowed to do more to attract technology firms to list in Hong Kong, including airing the possibilities of launching a new third board, which could be a perfect way for health care firms to continue funding their relentless expansion.

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