Companies could raise up to HK$210 billion (US$27.08 billion) from initial public offerings (IPOs) in Hong Kong this year, 24.3 percent more than last year’s HK$168.9 billion, Deloitte Touche Tohmatsu said Tuesday.
“We expect Hong Kong to be among the top three markets for fundraising, even though the number of listings is expected to drop to 85 to 100, from 104 last year,” Edward Au, co-leader of Deloitte China’s national public offering group, said.
The market will get a boost from ongoing reform in the mainland after a shaky first quarter exacerbated by a slowing domestic economy and geopolitical crisis in Ukraine, Au said.
Hong Kong raised HK$46 billion from 23 IPOs in the first quarter, 4.6 times the amount during the same period in 2013. The number of IPOs doubled, putting Hong Kong third behind New York and London.
“IPOs will mainly come from Chinese firms as the government continues to support enterprises going overseas, and from certain property developers seeking backdoor listings,” he said. Also, Au expects domestic family-owned businesses or spin-offs to tap the market.
“Major industries will be financials which need capital to strengthen their competitive advantage. Developers and consumer-related companies will make up a large proportion of IPOs, too.”
Meanwhile, accounting firm KPMG expects HK$200 billion from IPOs this year, mainly due to changes in some mega deals, it said in a statement on April 1. The figure is up more than 25 percent from 2013, with listing candidates seen from the technology and financial services.
Au weighed in on the “one man, one vote” shareholding structure, saying that as a mature international financial market, Hong Kong should offer products at different risk levels in response to market demand
Alibaba Group founder Jack Ma had proposed such a corporate structure in a planned Hong Kong IPO in which the founding partners of the e-commerce giant will maintain control of the company after the share sale. Hong Kong regulators turned down the plan.
On March 16, Alibaba announced its decision to start the IPO process in the United States, where securities regulators have approved its partnership structure.
Still, mobile games companies and technology firms are expected to draw interest from Hong Kong investors as long as their price-to-earnings ratio is reasonable.
In China, as many as 230 companies could list on the A-share market as regulators press on with a registration-based system in place of an approval-based mechanism. The number is up 49.4 percent from 154 IPOs last year, Deloitte said.
By the end of the year, the combined fundraising from these share sales could be as much as 170 billion yuan, up 64.4 percent from a year earlier.
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