An initial public offering (IPO) is how a company issues its first shares to the public. When a company goes public, it sells part of itself to investors to raise money that it can use to grow its business.
The growth of technology companies, the rise of “new economy” stocks, and the growth of private equity firms are three of the most important trends to watch in the Hong Kong IPO market in 2017. These trends are likely to continue, as they have been a big focus in the Hong Kong IPO market in recent years.
Hong Kong has been a popular destination for IPOs over the past few years. In fact, according to data from Dealogic, Hong Kong was the second-largest IPO market in the world in 2016, with $36.8 billion worth of deals. The United States was the largest IPO market, with $86.3 billion worth of deals.
The past year has seen several changes in the Hong Kong initial public offering (IPO) market, emerging several new trends. Here are some of the leading trends in Hong Kong IPOs.
A focus on high-quality companies
One of the most noticeable trends in Hong Kong IPOs this year has focused on high-quality companies. It is evidenced by many of the biggest IPOs in Hong Kong this year have been from well-established businesses with solid track records.
For example, the listing of Ping An Healthcare and Technology Company Ltd. was one of the most significant IPOsin Hong Kong this year, raising over US$1.5 billion.
“New Economy” stocks are companies focused on the digital age and have strong growth prospects. They typically include technology companies but can also include other companies such as e-commerce firms and healthcare companies.
New economy stocks have been a big focus in the Hong Kong IPO market in recent years. For example, new economy stocks accounted for 60% of all deals in Hong Kong.
A preference for backdoor listings
This year another trend in the Hong Kong IPO market has been a preference for backdoor listings. It is a trend noticed in other markets worldwide, as companies look to take advantage of the latest bull market to go public.
Backdoor listings are when a company goes public by acquiring an already listed company. It allows the company to bypass the lengthy and expensive process of going through an initial public offering.
A shift towards online IPOs
This year another trend in the Hong Kong IPO market has been a shift towards online IPOs. It is a trend seen in other markets around the world, as companies look to take advantage of the latest bull market to go public.
Online IPOs are when a company goes public by issuing its shares online rather than through a traditional IPO process. It allows companies to raise capital more quickly and at a lower cost.
A focus on small and mid-cap companies
This year another trend in the Hong Kong IPO market has been a focus on small and mid-cap companies. It is a trend that has been pronounced in other markets worldwide, as investors look for opportunities in smaller companies with high growth potential.
The number of small and mid-cap IPOs in Hong Kong this year has been significantly higher than in previous years.
A decline in the number of IPOs
Despite these new trends, the overall number of IPOs in Hong Kong this year has declined significantly from previous years. It is mainly due to the current market conditions, characterized by a high level of volatility and uncertainty.
As a result, many companies choose to delay their IPOs until the market conditions improve.
Conclusion
These are some of the most notable trends in the Hong Kong IPO market this year. Overall, it has been a year marked by a focus on high-quality companies, a preference for backdoor listings, and a shift towards online IPOs.
Additionally, there has been a focus on small and mid-cap companies and a decline in the overall number of IPOs. As the market conditions improve, we will likely see these trends continue to develop.
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