Initial public offerings in Hong Kong are poised to flourish for yet another year in 2021, with listings by biotech companies continuing to make waves, according to accounting and consulting firm PwC.
Total funds raised by IPOs in the city could rise to between HK$420 billion ($54.2 billion) and HK$460 billion ($59.3 billion) this year as companies form a beeline to raise funds for their corporate development. New economy companies, such as those in the technology and biotech sectors, as well as US-listed Chinese enterprises seeking a second listing in the former British colony, should remain the main drivers for listing activities, PwC said.
The projected fundraising amount compares with the HK$397.7 billion in IPO funds raised in 2020, itself a 25% increase from the level in 2019, making Hong Kong the world’s second-largest market for new listings by funds raised. There were 154 new listings in Hong Kong last year, including 146 on the main board and eight on the Growth Enterprise Market, or GEM, board.
Nasdaq said in a statement on Dec. 17 that it had welcomed 300 IPOs in 2020 that raised a total of $77.86 billion.
Hong Kong, meanwhile, has ranked among the world’s three largest IPO markets by funds raised for more than 10 consecutive years, according to PwC. The firm expects 170 IPOs in the city in 2021.
Hong Kong managed to achieve the distinction last year despite the eleventh-hour suspension of an IPO by financial technology giant Ant Group. Ant was expected to raise more than $34 billion in a dual IPO in the city and Shanghai.
Eddie Wong, Hong Kong capital markets services partner at PwC, said the trend of increasing biotech company listings in the city is expected to remain active in 2021 and will “gradually make Hong Kong the best listing platform for biotech companies in Asia.”
A proposed expansion to the stock connect scheme, which electronically links Hong Kong with mainland stock exchanges in Shanghai and Shenzhen, will allow Hong Kong to “offer more unique value and business opportunities for enterprises and investors, playing an active and important role in establishing China’s multi-level capital market,” said Benson Wong, Hong Kong entrepreneur group leader at PwC.
In mainland China, the Science and Technology Board in Shanghai, also called the STAR Market, raised RMB222.6 billion ($34.5 billion) for 145 companies in 2020. There were a total of 395 IPOs across all stock exchange boards in mainland China last year, which raised a total of RMB471.9 billion.
More activity is expected in 2021, with 430-490 new listings across those boards raising a total of RMB450 billion to RMB480 billion, PwC estimated.
