China firms tap virus-driven liquidity to raise record US$148b in equity deals

Next week, the mainland's JD Logistics Inc is expected to kick off its Hong Kong listing to raise at least $3 billion, the latest in a list of billion-dollar IPOs in the financial hub.

HONG KONG: Chinese companies raised a record $148 billion through global equity capital markets in the first four months of 2021, data showed, as they tapped the ample cash available with investors due to the coronavirus pandemic.

That was more than double the sum they garnered from equity markets in the year-ago period and accounted for a fifth of all equity capital raising deals this year, according to data from Refinitiv.

Of that, Chinese companies raised a record $31.9 billion through initial public offerings (IPOs), double from the year-ago period.

The data indicated investors were drawn to China's economic recovery and huge consumer market, despite concerns about government action against some sectors.

Companies benefitted from the liquidity sloshing around as governments worldwide ramped up stimulus measures to combat the economic impact of the pandemic and consumers cut back on discretionary spending.

"It's a very strong market and valuations are solid," said Matt Emsley, China managing partner at law firm Herbert Smith Freehills.

"We are seeing a number of companies looking to list on fairly tight timetables and we are seeing companies looking to kick off deals running into the second half which indicates there is a lot of desire with financial stimulus plus the level of retail participation and savings that is creating a very strong market."

China was the second most active capital-raising country in the world behind the United States where $312 billion was raised primarily from Special Purpose Acquisition Companies (SPACs), or blank check firms.

Given the strong start to the year, the volume of Chinese deals may moderate later in 2021, bankers said.

"Can the trend continue? There are a list of more than 100 tech unicorns out of China, so this can definitely continue for several more years but the big question is going to be whether those tech unicorns opt for public markets and IPOs or whether they opt for raising more money in a private format," said Magnus Andersson, co-head of Asia-Pacific equity capital markets at Morgan Stanley in Hong Kong.

"The jury is still out and how markets perform over the next three to six months is going to be a driver of whether we see private fundraisings coming back or whether we see more public IPOs."

Next week, the mainland's JD Logistics Inc is expected to kick off its Hong Kong listing to raise at least $3 billion, the latest in a list of billion-dollar IPOs in the financial hub.

And three Chinese companies - Ximalaya, Qiniu and Hello - that have publicly filed for U.S. IPOs are due to start their book-building processes shortly, people with knowledge of their plans said. - Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3

Next In Business News

Bermaz profit raises to RM133.9mil in FY21
Palm oil reverses course to trade up 1% on stronger US soyoil
Uzma, Petra Energy JV wins onshore petroleum E&P contract in Sarawak
Ipmuda sells PJ property to Kerjaya Prospek, eyes expansion into renewable energy and healthcare businesses
Tenaga, plantations power KLCI sharply higher
Malaysia maintains CPO export tax at 8% for July
FDI slips to lowest since 2009 due to pandemic
Vehicle sales in May doubled on-year but minimal sales seen in June
Malaysia's Carsome weighs US listing with SPAC as option
Pound tumbles as virus resurgence clouds hope for UK recovery

Stories You'll Enjoy