Reports

Hong Kong, US IPO Market Fund-Raising Defies Virus Woes

Tom Burroughes, Group Editor, 5 January 2021

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Data from two of the main IPO hubs of the world shows that in the value of funds raised, 2020 was a strong year, even if certain specific share pricing numbers declined. As has been reported, however, one of the biggest-ever deals that was scheduled - that of China's Ant Group - was suddenly cancelled, fueling speculation about regulators' concerns.

Initial public offerings caught the headlines in 2020 – not always for positive reasons - with total values rising in the US and Hong Kong. Figures show how the COVID-19 pandemic did not knock these liquidity events down dramatically. 

Within Hong Kong, total funds raised by IPOs in 2020 reached HK$397.7 billion ($51.3 billion), according to figures from PricewaterhouseCoopers

Separately, in the US, some $78.2 billion in new cash was raised from such stock market flotations - 69 per cent higher than the amount raised during the prior year. (Source: Integrity Research Associates.)

There has been controversy, however. Ant Group, an affiliate of Chinese e-commerce giant Alibaba, had been slated to have its $34 billion IPO in early November in what would have been the world’s largest share float ever. However, investors were stunned when the IPO was pulled only a few days prior to the event. (Reports said that Ant Group’s rapid lending growth rattled regulators. In just one year, Ant Group had written loans to half a billion people in China which accounted for nearly a fifth of the country’s outstanding short-term consumer debt as of June.)

PwC predicts that Hong Kong will break records in terms of total IPO funds raised in 2020, coming in between HK$420 and HK$460 billion. New economic sectors and US-listed Chinese enterprises remaining as the main drivers for listing activities. The active listings activities of biotech companies in 2021 will gradually make Hong Kong the best listing platform for biotech companies in Asia, PwC said. 

The firm noted that there were 154 new listings in 2020 in terms of numbers of IPOs, of which 146 were Main Board listings, mostly comprising retail, consumer goods and services companies and industrials, for which the number of listings fell by 16 per cent compared with the number of listings in 2019. The number of GEM Board (Growth Enterprise Market) new listed companies in 2020 also fell compared with the number of listings in 2019. Eight companies were listed on the GEM Board in 2020, falling by 47 per cent year-on-year.

“While being confronted by the COVID-19 pandemic as well as global geopolitical and economic uncertainties and other factors in 2020, Hong Kong IPO market had an amazing year yet again,” Eddie Wong, PwC Hong Kong capital markets services partner, said. “Hong Kong ranks second in total funds raised among the global IPO markets and has been ranked among the top three globally for more than 10 consecutive years.”

Uncle Sam
In the US, 218 deals were priced in 2020, rising 36 per cent higher than the number of new deals priced in 2019. The total number of new deals priced during 2020 was stronger than any annual total seen since 2014 when 275 new deals were priced. Throughout 2020, $78.2 billion in new capital was raised, a 68.9 per cent surge over the $46.3 billion in new capital raised during 2019.

During 2020, 261 new deals were filed, 25.5 per cent higher than the 208 new deals filed during 2019. In fact, the total number of new filings recorded during 2020 was higher than any year since 2014 when 364 new filings were listed.

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