IPOs pick up in Hong Kong next year with China reopening plan

Bloomberg

After the worst year for initial public offerings (IPO) in Hong Kong since the financial crisis, bankers and analysts expect a recovery in listings in the Asian financial hub as China moves forward with reopening plans.
Proceeds raised in the city totalled $12.9 billion in 2022, down 70% versus last year, outpacing the 29% contraction in the Asia Pacific as a steady flow of deals in mainland China helped boost the broader region.
Hit by Beijing’s regulatory clampdowns, Covid policy and a property crisis on top of concerns over global interest-rate hikes, Hong Kong deals
shrank in size this year. While large offerings may take a while to recover, market watchers see a number of mid-sized Hong Kong deals in the first quarter amid rising optimism over the Chinese economy.
“With the transition towards a reopening, we anticipate several delayed Chinese IPOs and follow-on transactions to occur in the near term,” said Murli Maiya, head of equity capital markets for Asia Pacific at JPMorgan & Chase Co in Hong Kong, adding “these are more likely to be either onshore or in Hong Kong rather than the US.”
Additional share sales increased in the fourth quarter as China announced support for the real-estate sector, triggering hopes for a rebound in the beaten-down sector. Increased placements and sales of share blocks are seen as positive for IPOs as well, as they indicate issuer and investor appetite.
“With China opening up, everyone is hoping that next year will be a better year — because there is a solid IPO pipeline, with a series of companies that have submitted applications for listings or are waiting to do so,” said Victoria Lloyd, a partner in Baker McKenzie’s capital markets practice in Hong Kong. “I am actually quite positive that after Chinese New Year the pipeline will pick up.”
Some of the companies seeking to list in Hong Kong are Xiamen International Bank Co, which could raise about HK$10 billion ($1.3 billion), and
Ruqi Mobility, state-backed automaker GAC Group’s ride-hailing unit, Bloomberg reported.
China’s onshore market meanwhile saw a record year for IPO proceeds at $93.5 billion in 2022, helped by Beijing’s efforts to discourage overseas listings and promote the local market. The trend is expected to continue next year as more developers seek to raise funds through equities.