Chinese TMT IPO Momentum Continues to Strengthen into 2017

In the second half of 2016, China reported 58 Technology, Media and Telecommunications (TMT) IPOs, according to PwC.

Total proceeds raised from the IPOs was RMB 33 billion, a sharp rise of 547% from the first half of 2016. During the same period, global tech IPOs bounced back.

“In 2017, Chinese TMT IPOs are expected to continue to rank among the top three globally,” says Wilson Chow, PwC China and Hong Kong TMT Leader.  “As Chinese regulators speed up the approval of IPOs, we will see a significant increase in domestic public listings by TMT companies.”

Globally, tech IPOs regained momentum. According to the newly-released PwC’s Global Technology IPO Quarterly Review (recording IPOs with issue size greater than US$40 million), 29 tech IPOs were listed in the second half of 2016, raising a total of about US$6.5 billion, up 21% and 195% respectively from the first half.

IPO Volume

China reported 10 tech IPOs, landing second place in IPO volume, trailing behind the United States which had 11 tech IPOs.

In terms of proceeds, Chinese tech IPOs ranked fourth globally. The increase of proceeds was mainly driven by messaging app Line Corp, which raised US$1.1 billion in a NYSE, and Danish digital payment services company Nets A/S, which raised US$2.4 billion on Copenhagen’s OMX.

The two giant offerings drove global tech IPO proceeds soaring to US$5.4 billion in the third quarter of 2016. However, the proceeds fell back again to US$1.1 billion in the fourth quarter of 2016.

In the second half of 2016, 52% of Chinese TMT IPOs listed on the GEM in Shenzhen, 29% on the Main Board, 10% on the SEM in Shenzhen and 9% on overseas markets. In terms of proceeds, the GEM, which had the largest number of Chinese TMT IPOs during the period, raised a total of about RMB 9.1 billion, accounting for 28% of total proceeds.

The Main Board continues to be a major fund-raising channel for large-sized enterprises, with 17 TMT IPOs raising a total of RMB 15.4 billion, accounting for 47% of total proceeds.

Notably, five Chinese TMT companies went public in Hong Kong and overseas markets in the second half of 2016 with collective proceeds of about RMB 6.4 billion. This accounted for 19% of total proceeds, a 1500% jump from the first half of 2016.

Among them, Hong Kong-listed Meitu raised HK$4.879 billion (about RMB 4.2 billion), accounting for 66% of total proceeds raised by overseas-listed Chinese TMT companies.

Chow said, “In the short term, the Chinese A-share market will continue to be a major channel for Chinese TMT companies to list shares. But as several Chinese TMT companies successfully listed stocks in the US and Hong Kong markets in the second half of last year, sustained momentum of overseas markets will offer TMT companies an extra listing option, especially for those who have yet to make a profit.”

Chow added, “The A-share market is expected to become one of the hottest IPO destinations globally. However, this will also add pressure on valuations. As China accelerates approvals of A-share IPOs, regulators are stepping up efforts on supervision and inspection. Enterprises eyeing domestic listings are set to meet the new requirements.” 

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