PwC says IPOs in mainland, HK active

Technology, media and telecommunications firms on the Chinese mainland remained active in the domestic capital market in the second half of last year, a report from global accounting firm PwC stated.

Hong Kong will continue to be the first choice for secondary listings of US-listed Chinese mainland enterprises in the first half of this year, the PwC report stated.

With the fine-tuning of the registration-based IPO system, the listing and issuance of shares on the Shanghai Stock Exchange's STAR Market and the Shenzhen bourse's ChiNext board are expected to be active in the first half of this year, said Emily Liu, PwC Chinese mainland assurance partner.

In addition, the establishment of the Beijing Stock Exchange and the deepening reform of the National Equities Exchange and Quotations, also known as the "new third board," will create more opportunities for innovative small and medium-sized enterprises, she said.

There were 74 IPOs by TMT enterprises from the Chinese mainland in the second half of 2021, down from 78 in the first half, the report stated. The 74 IPOs raised about 150.7 billion yuan ($23.9 billion).

The largest IPO was made by China Telecom for about 48 billion yuan on the main board.

In the second half of 2021, the domestic capital market became the preferred option for TMT enterprises from the Chinese mainland intending to list. Some 39 percent of the 74 IPOs were made on the STAR Market and 28 percent on the ChiNext.

And 29 TMT IPOs on the STAR Market received 46.2 billion yuan, or 31 percent of the total. The ChiNext in Shenzhen registered 21 TMT IPOs, with total financing amounting to 13.1 billion yuan, or 9 percent of the total, the report said.

Another 11 Chinese mainland TMT enterprises, representing 15 percent of the total, chose to list on the Beijing Stock Exchange, garnering 2.2 billion yuan. Additionally, eight Chinese mainland TMT enterprises, or 11 percent of the total number of IPO-bound enterprises, opted to list in Hong Kong and overseas, and these listings netted 37.2 billion yuan, or 25 percent of the total proceeds.

The technology hardware and equipment sector saw 45 IPOs in the second half of 2021, accounting for 61 percent of TMT IPOs. In the same period, there were 24 IPOs in the software and related services sector, making up 32 percent of listings.

The introduction of the special purpose acquisition company listing mechanism by the Hong Kong stock exchange will inject new vitality into the local capital market, PwC said.

The SPAC listing mechanism will also open opportunities for new economy and innovative companies to create more diversified listings and provide alternative financing channels.

In the second half of 2021, three Chinese mainland TMT companies chose Hong Kong for secondary listing, and gathered about 27 billion yuan, or 18 percent of the total raised from TMT IPOs in the second half of the year, said PwC.

Shen Meng, director of boutique investment bank Chanson & Co, said that after the secondary listings in Hong Kong, more Chinese mainland investors will be able to invest in and receive dividends from listed enterprises through the stock connect programs between the mainland and Hong Kong.

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