Hong Kong looks set to reclaim IPO crown with nearly US$300b haul in January-November

Proceeds from New York IPOs only hit US$205b as it settles for a tentative second place.

Even with one more month to go before the year closes, Hong Kong appears to have already achieved its plans to climb its way back to the top of the global IPO league as it wrestled the top spot from the New York bourse in first-time share sale proceeds from January-November 2018.

Hong Kong's estimated IPO haul nearly hit $300b (US$38.4b) in the first 11 months of the year compared to New York Stock Exchange proceeds at $205b (US$26.5b) and NASDAQ’s $190b (US$24.5b), data from KPMG show.

“Hong Kong’s buoyant market has continued to attract up-and-coming companies from around the world, with 25 overseas companies listing during the year,” the report’s authors noted.

The Main Board witnessed its most active year in history with a record-breaking 133 new listings and more than double the amount raised in 2017.

The Telecom, Media and Technology (TMT) sector set the pace for the industry with a massive $150b haul, a figure exceeding the combined funds raised in the past five years on the back of blockbuster IPOs from China Tower, Xiaomi and Meituan Dianping. From less than 15% in 2017, over 25% of IPOs in Hong Kong are new economy companies.

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The infrastructure/real estate sector also made a strong showing with 14 real estate firms raising over $20b so far. The positive momentum is only expected to extend well into 2019 with over a quarter of Hong Kong’s bloated IPO pipeline originating from the sector.

On the other hand, the financial services sector lost some steam and slid down to third place in terms of total fundraising due to the lack of mega-sized securities and insurance company listings.

“The financial services sector is undergoing a transformation– as a sector traditionally dominated by commercial banks, there has been an increasing shift towards “new economy” companies engaged in fintech and online payment solutions,” explained KPMG.

The sweeping reforms to the listing regime which allowed the listing of biotech firms with no track record of profitability and innovative companies with weighted voting rights (WVR) structures also paid off with three of the top ten largest IPOs in 2018 falling under the new listing regime. Additionally, four pre-revenue biotech firms and two with WVR structures have listed as of end-November.

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“Healthcare / life sciences will continue to be a key driving force in the Hong Kong IPO market, stemming from the increased demand driven by an aging population in developed countries. We expect a major growth in biotech companies listing in 2019,” the report’s authors said.

Similarly, the GEM booked a stellar year in 2018 with 75 new listings for a $5.1b haul.

The future looks bright for Hong Kong’s IPO market with new economy companies, overseas and Mainland firms set to retain the listing momentum. “We forecast that the total proceeds for 2019 will exceed HKD200 billion with approximately 200 new listings, though the final figure would heavily depend on the timetables of several mega-sized IPOs,” concluded KPMG.