(CRI English)
Updated: 2007-10-31 13:42

Companies in Chinese mainland and Hong Kong raised US$14 billion through initial public offerings (IPOs) in the third quarter of 2007, well over double the US$6 billion raised in the same period a year earlier, according to a quarterly Global IPO Report from Ernst & Young, the professional services firm.

China companies completed 77 IPOs in a record quarter for China IPOs - up from 46 IPOs in the same period a year earlier.

Globally, US$57 billion was raised in 428 IPOs in the third quarter, and the amount of capital raised increased by 27% from the same quarter a year earlier, and decreased by 36% from the previous quarter. Global IPO activity was driven by the emerging markets of Brazil, Russia, India and China (BRIC), which together raised US$27 billion in a record 118 IPOs and accounted for seven of the 10 largest IPOs in the third quarter.

"The record number of IPOs in the emerging markets reflects a broadening of the issuer base in these economies and the continuing global shift in asset allocation towards emerging markets, where returns are potentially higher," says Gil Forer, Global Director of Venture Capital and IPO Initiatives at Ernst & Young.

"The IPO market in Chinese mainland and Hong Kong was robust in the third quarter, with a high level of activity reflected in the number of companies going public and the total amount of funds raised," says Philip Leung, Ernst & Young Far East IPO Leader, commenting on the 79% increase in the number of IPOs in the third quarter from the second quarter. “The record number of IPOs in the mainland and Hong Kong shows companies were quick to react to keen investor interest in equities, helped by the continuing strong growth of the Chinese economy."

In the first three quarters of the year, Chinese companies raised US$36 billion in total through 170 IPOs. In addition, China companies that have H shares listed in Hong Kong raised another US$24.5 billion through the issue of A shares to investors in mainland China in the first nine months. By comparison, Chinese companies raised US$22 billion through 101 IPOs in the first three quarters of 2006, and went on to raise US$58 billion for the entire year, owing in large part to the Industrial & Commercial Bank of China’s record US$22 billion IPO in the fourth quarter of 2006.

"What the latest data demonstrates is a continuing dominance of Chinese companies in equity fund raising. Three of the Top 10 IPOs and 5 of the Top 20 IPOs by funds raised were from China in the third quarter," says Leung.

The five biggest China IPOs in the third quarter, in order of funds raised, were: Bank of Beijing, Sino-Ocean Land Holdings, Fosun International, Bank of Nanjing and Western Mining.

"We expect the fourth quarter to put in a strong performance, as has been the trend in recent years. Provided investor confidence remains positive, there is every reason to believe that funds raised by companies in China and Hong Kong will comfortably exceed US$50 billion for 2007," says Joe Tsang, China North Assurance Leader, Ernst & Young. "Indeed, in the past four years, the fourth quarter has been stronger than the third quarter."

In a global context, China led activity by capital raised, making up 25% of the global total, followed by Brazil with US$9.3 billion, and the US with US$8.3 billion. China was also most active in terms of number of IPOs (77), surpassing Australia (50), and the U.S. (36).

In terms of preferred fundraising locations, more Chinese companies chose to list locally, with more than 50% of companies opting to list on the Shanghai or the Shenzhen stock exchanges in the third quarter.

In terms of industries, companies in the financial and real estate industries generated 5 of the Top 20 China IPOs in the first three quarters of the year, while companies in the materials industry generated 4 of the Top 20 China IPOs.