YICAI｜China's Offshore IPO Market Has Recovered, Goldman Sachs Says
(Yicai) March 14 -- The Chinese market for offshore initial public offerings has recovered, according to Wang Yajun, co-lead of equity financing at Goldman Sachs Asia ex-Japan.
The number of so-called A+H share listings, where firms list simultaneously on Chinese mainland and Hong Kong exchanges, has jumped this year, Wang said at a media briefing yesterday. With the full recovery of the offshore IPO market and the quickening pace at which long-term international investors are returning, this wave will likely continue for two years, he added.
Chinese companies raised USD44.8 billion offshore last year, more than double the USD19.5 billion banked the year before, marking a clear turning point despite the annual figure coming under the historical average of USD75 billion, according to UK data provider Dealogic.
Businesses have raised USD13 billion offshore in the past 10 weeks as of yesterday, a 23-fold increase from a year earlier, Wang said. If that pace continues, the full-year figure could reach around USD65 billion, he pointed out.
January and February are typically slow months for corporate financing, so USD13 billion is an exceptional amount by historical standards, Wang noted.
Consumer sector IPOs will likely be among the first to take off, as their business models are simple and easy to understand, making research easier and reducing the complexity of investment decisions, according to Wang. Consumer businesses also face relatively lower geopolitical and operational risks, he added.
The largest companies to go public in Hong Kong so far this year have included bubble tea brands Mixue Ice Cream & Tea and Goodme, along with toymaker Bloks Group. Each one attracted international investors.
The non-anchor international portions of Mixue's IPO was oversubscribed 70 times, Goodme's 15 times, and Bloks's 39 times, according to the Hong Kong Stock Exchange. In addition, the number of medium- and long-term investors exceeded 20 for each of the three firms.