In Focus

Hong Kong nine-month IPO proceeds balloon 174% as pipeline looks fit to burst

The proceeds from share sales hit $240b as of Q3.

Escalating tensions in the global economic arena failed to dent Hong Kong’s thriving IPO activity as total funds raised by IPOs in the first nine months of 2018 ballooned by 174% YoY to a whopping $240b, according to PwC.

The Main Board contributed $235.4b in IPO proceeds whilst the GEM was able to account for $4.6b in the first three quarters of 2018. Retail, consumer goods and services dominated both boards in terms of new listings followed by industrial products and financial services.

Also read: Hong Kong raises record US$19.2b in summer IPO haul

However, the high-end manufacturing and high-tech companies are expected to dominate in terms of total transactions and proceeds alongside the financial services sector which is expected to eat up market share by Q4, KPMG said in an earlier report. 

Despite a good haul that already guarantees Hong Kong a spot in the top three spots of the global IPO leaderboard, the SAR’s IPO pipeline remains bursting at the seams on the back of a 46% increase in new listings compared to the same period in 2017 of which 99 were for the Main Board and 67 for the GEM.

Two to three large-scale IPOs are expected to take place in Q4 2018, added PwC, as the positive momentum is expected to extend until Q1 2019.

“The new listing regulations introduced by Hong Kong Exchange (HKEX) has rejuvenated the demand in Hong Kong IPO market, so far 2 companies have been listed under the new weighted voting right (WVR) rules,” PwC said in a report.

So far, the total number of IPOs in the first three quarters of 2018 hit 166 in January to September from 114 in the previous year, data from PwC show. KPMG expects the number of IPOs to surge by 73% to 88, whilst the average deal size will increase to $2.71b.

Against a stellar Q3 performance, PwC joins the chorus of market analysts increasingly bullish about Hong Kong’s prospects to reclaim the top spot in the global IPO league amidst expectations of IPO proceeds of $300b and 220 new listings.

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