HK’s IPO market sees slowdown in H122

Funds raised in H122 plummeted by 92% YoY. 

Hong Kong’s IPO market slowed down in the first half of the year with only $17.7b raised funds, data from KPMG has shown.  

The total proceeds in H122 represent a 92% YoY decline. Deals also dropped from 64 in H121 to 24 in H122, said KPMG.

According to the report, IPO activities in the city slowed down amidst macroeconomic uncertainties. As these uncertainties fade, KMPG said it sees more listings in the local bourse, particularly special purpose acquisition companies (SPACs).

In H122, two out of 13 SPACs that applied were listed. The two SPACs raised a total of $2.0b.

“The SPAC regime is expected to bring renewed momentum to the Hong Kong market this year and beyond, attracting more New Economy companies, including new energy, healthcare, biotechnology and green finance firms on the local exchange,” KPMG said.

Based on KPMG’s report, the top three target sectors of SPACs in HK are TMT (technology, media, and telecom) (29%), healthcare/life sciences (25%), and consumer markets (21%).

TMT and healthcare/life sciences were also amongst the top sectors which had the most contributions to the total funds raised at 28% and 23%, respectively. The top sector was Industrials which contributed 37% to the total proceeds.

“Healthcare/life sciences listings are expected to remain as one of the top sectors this year with the largest number of applications in the pipeline,” KPMG said. 

Apart from SPACs, KMPG also expects more homecoming listings in HK. There were three homecoming listings in the first half, which include two listings by introduction deals.

“Hong Kong continues to be the natural choice for homecoming listings because of the city’s geographical proximity and its capital flow mechanisms with mainland China, underpinned by the current uncertainties Chinese issuers are facing in the US market, “ KPMG said.

In the months to come, KPMG said HK’s IPO market will continue to be slumped by the global geopolitical, and economic uncertainties and the ongoing pandemic; but the “solid” IPO pipeline of the city will likely fuel the gradual pickup of the market.

So far, more than 170 applicants are waiting to be listed on the city’s bourse.

“Despite the challenging funding environment and global market uncertainties, businesses across different sectors continue to pursue major digital transformation and decarbonisation initiatives. Such demands are creating opportunities for companies involved in digital and sustainable/renewable technologies which would be attractive to strategic and corporate investors,”  Irene Chu Partner Head of New Economy and Life Sciences KPMG China.

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