China’s A-share markets could see around 250 billion yuan (US$41.3 billion) raised in initial public offerings (IPOs) this year involving more than 300 firms, according to audit and consultancy giant PricewaterhouseCoopers (PwC).
“We expect there will be two to five companies that will raise more than 10 billion yuan each this year,” Benson Wong, Assurance Practice Partner at PwC, said at a news conference in Hong Kong on Thursday. He expects the companies to mainly come from retail, industrial and technology sectors.
The China Securities Regulatory Commission on Tuesday gave six more companies the go-ahead to sell shares publicly in Shanghai and Shenzhen, after granting approval to five candidates a day earlier.
Wong says the resumption of IPO approvals sends a positive signal to the market. It will, however, not have much impact on the Hong Kong IPO market as the mainland will take some time to digest the long queue of companies, he said.
PwC believes about 100 companies will seek listings in Hong Kong this year, raising a total of more than HK$250 billion (US$32.13 billion). The new listings in the city are expected to mainly come from the retail, financial and technology sectors, while some energy firms may also jump into the ring amid a potential rise in commodity prices.
There will be more mega-size IPOs this year, according to PwC. “We expect there will be four to five listing bids involving more than HK$50 billion fund-raising each,” Wong said, adding that at least two of them will be from retail and utility sectors. He added that at least two companies will seek to raise more than HK$10 billion each.
Power Assets Holdings Ltd. (00006.HK), controlled by billionaire Lee Ka-shing, has unveiled a plan to float its utility arm in Hong Kong by means of selling share stapled units of HK Electric Investments Ltd. The spin-off could generate up to HK$44 billion, the Hong Kong Economic Journal reported last month, citing market sources.
Hutchison Whampoa Ltd. (00013.HK), another Li group entity, plans to spin off its retail arm Watson’s to raise about HK$34 billion, the Hong Kong Economic Times reported on Thursday, citing market sources. If the reports turn out correct, the two IPO will raise about HK$78 billion in total, accounting for nearly a third of the total IPO fundraising seen in Hong Kong this year.
Meanwhile, PwC said that it is still hard to say whether Chinese e-commerce giant Alibaba Group could get listed in Hong Kong this year. Listing candidates should strike the right balance to ensure protection of shareholder interests as well as the firms’ operational efficiency, it said.
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