The most awaited IPOs from HK & China
More than 100 new listings are expected to raise around HK$200 billion (US$25.6 billion) this year, according to PwC.
According to Refinitiv statistics, a difficult initial public offering (IPO) market in Hong Kong caused the city to hold to third position in the world’s fundraising rankings in 2022, falling behind archrivals Shanghai and Shenzhen.
The Federal Reserve’s recent string of big interest-rate increases and China’s deteriorating development forecast, which was exacerbated by its zero-Covid policy, were two of the main causes that reduced investors’ desire for new shares.
This declining demand resulted in lower stock sales or subpar IPO performances. This was demonstrated by the fact that Kuaishou Technology’s HK$48.3 billion, the top deal the year prior, was much lower than China Tourism Group Duty Free’s HK$18.4 billion yuan (US$2.4 billion), the largest IPO last year.
With China dismantling its harsh Covid restrictions and the Fed’s pivot to a dovish stance on interest-rate increases, analysts expect IPO activity to pick up. PwC expects 100 new listings in Hong Kong in 2023 and the total amount of fundraising to almost double to HK$200 billion, which could vault the city back to the top of IPO charts.
Here are six highly anticipated IPOs to watch out for this year in Hong Kong and mainland China:
Ant Group IPO
Investors are eagerly awaiting news on the resumption of Ant Group’s shelved IPO.If China’s regulator allows this stock offering to go ahead, it would be a clear indication that Beijing has largely ended its more than three-year tech crackdown.
That will also mean an endorsement of the business rectifications undertaken by Ant by the financial regulators.However, Ant’s valuation, China’s biggest digital payment company, has shrunk significantly from 2020 when the regulator halted its simultaneous US$34.5 billion IPOs in Shanghai and Hong Kong as it closed some business operations and slowed the expansion of online lending to comply with new industry regulations.
The net income for the quarter ending September fell 63 per cent from a year earlier, a second consecutive quarter of declines according to Alibaba’s quarterly report.Ant is about a third owned by Alibaba Group Holding, the parent company of the Post.
ByteDance IPO
While the owner of the popular short video app TikTok has repeatedly said there is no timetable for a listing, a series of restructuring plans involving its Hong Kong entities have fanned speculation about a coming listing in the city.The Chinese start-up had to postpone its IPO last year due to the regulatory crackdown on the tech industry and frayed ties between Beijing and Washington.
TikTok, which is hugely popular in the US, has been a source of tension between the two biggest economies of the world.The app has been banned from all US House of Representatives-managed devices over fears that the Chinese government could use it to track Americans and censor content.One major challenge facing the company is how to separate
Douyin’s China-based operations from the global ones of TikTok, both of which share the same algorithm.Once the world’s most valuable start-up, ByteDance’s valuation has also been battered by the regulatory curbs that have erased about US$1 trillion in market value from Chinese technology companies trading overseas.ByteDance is now valued at about US$300 billion compared to an all-time high of US$400 billion a year ago.
Syngenta Group
Syngenta’s IPO has drawn attention because the Basel-based company is a unit of the state-owned China National Chemical Corp (Chinachem).The company is expected to raise US$10 billion from Shanghai’s technology-heavy Star Market in what could be the biggest stock sale in the world this year.
The application to list Shanghai was approved in July 2021.Syngenta was formed in November 2000 after the merger of the Novartis and AstraZeneca agriculture subsidiaries.It has become one of the world’s biggest suppliers of seeds, pesticides and fertilisers, competing with US Corteva and Germany BASF and Bayer.It was acquired by Chinachem in 2017 for US$43 billion in what remains the largest takeover of a foreign company by a Chinese firm.In April 2021, Chinachem merged with Sinochem.Syngenta plans to use the proceeds of its IPO to fund its growth and as a financial war chest to acquire more of the US$100 billion global market for seeds and agrichemicals.
Amer Sports IPO
Chinese sportswear maker Anta Sports Products is said to have started initial talks with investment banks on an IPO of its Finland-based subsidiary Amer Sports, which could raise at least US$1 billion.Anta Sports holds a 47 per cent stake in Amer Sports.
Amer Sports has grown through acquisitions, purchasing manufacturers of ice hockey sticks and tennis rackets.Four students started Amer as a tobacco company in 1950 and expanded into other areas such as shipping, printing and publishing before it began to focus on sports businesses and withdrew from the tobacco unit in the 1980s.
FWD Group IPO
The insurer, backed by tycoon Richard Li Tzar-kai, may revive its IPO plan this year as the stock market sentiment improves.FWD Group put its stock offering on hold just eight days after the Hong Kong Stock Exchange approved its US$1 billion listing plan last year, citing market turmoil.
In February it filed its application.The Hang Seng Index rebounded more than 30 per cent from a 13-year low on October 31 after China scrapped all Covid-19 curbs, dropping quarantine and testing requirements and allowing overseas travellers to enter the country without restrictions.
FWD is among the top three insurance companies in Thailand and the Philippines.
Didi Global IPO
The Chinese ride-hailing giant may list in Hong Kong after the company delisted from the US and Beijing largely wrapped up its years-long investigation into Didi by fined it about 8 billion yuan (US$1.2 billion) last year.
Didi was slapped with harsh punishments from Chinese regulators after it ignored a request from the top and proceeded with its stock offering in New York in 2021.Just days after it began trading in the US on June 30, 2021, China’s cybersecurity regulator started an investigation into the company citing breach of data security and ordered the app to be removed from stores.
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