Don’t worry about amount raised, get out first – Chinese firms rush to list overseas, avoid 2019 headwinds
- Companies are thinking it is better to take the current offer rather than risk ‘China’s continued slowdown in 2019’
- Quite a few companies slashed their fundraising targets in 2018
Vivien Han’s company went public in New York this summer, grabbing headlines in the Chinese media, and was considered another rising star that had successfully tapped the fast-growing Chinese consumer market.
Han and her colleagues, however, did not consider the initial public offering (IPO) a success. “We had to cut the fundraising volume two times … market sentiment was not at its best. We suggested to our boss that maybe we should wait for a better window,” said Han. But the company’s founder insisted that they go ahead, regardless of the amount that could be raised.
Hong Kong IPOs to raise HK$100 billion less in 2019, says KPMG
The company went public on the New York Stock Exchange – and raised less than US$100 million.
“The boss said the most important thing for us was to get out [of China] as soon as possible, as we did not know how bad the economy may get in the coming year,” she added.
Han’s company is not alone. Chinese firms have been flocking to overseas capital markets in 2018, regardless of discounts in valuations and fundraising sizes. Worried about a slowing economy, growing pressures from the US-China trade war and tighter policies undertaken by Beijing, from deleveraging to capital controls, many entrepreneurs are in a race against the clock to get their companies listed overseas, thus diversifying their assets and risks.
“Some companies have pushed forward their IPO plans, despite investor caution and lower valuations. This is a reasoned bet by management that it’s better to take the current offer rather than accept the risk of China’s continued slowdown in 2019,” said Brock Silvers, the managing director of Shanghai-based investment advisory Kaiyuan Capital.