Overseas Listing Markets were Diversified; Single Offer Size was Small
In general, the listing markets in Q3 were typically diversified. Besides the popular venues HKMB, NYSE, SGX and NASDAQ, other markets including TSE, KOSDAQ, SESDAQ and AIM also attracted Chinese IPOs. Notably, Beijing Boqi Electric Power, an environmental protection solution provider, debuted on TSE with US$191.00M raised. This was also the first Chinese enterprise to float on that board. 3NOD, a multi-media and home cinema producer, became the first Chinese enterprise and also the first non-South Korean enterprise debuting on KOSDAQ with US$31.52M raised.
Though the overseas IPO events created a historical record, the offer amount was not high, due primarily to the smaller, single offer size. Over one half of the overseas listings raised amounts between US$10.00M and US$60.00M. HKMB-listed Sino-ocean Land was spotlighted with US$1.78B raised.
Domestic Markets Outstripped Overseas Markets in IPO Events and Total Offer Amount
Forty Chinese enterprises raised an aggregate US$14.39B on domestic markets. The IPO events and total offer amount both reached quarterly peaks, reflecting the robust domestic capital market. As for the total offer amount, it was increased by US$5.42B quarter-on-quarter and US$8.26B year-on-year. In addition, the domestic IPO events were increased by seven and the offer amount by US$6.92B from the overseas IPO events.
The increased offer amount was contributed to by the surge in IPO events. Forty enterprises floated on the Chinese domestic market this quarter, at par to that of Q4'06 and nearly double that of the previous quarter. Moreover, the IPO events in Q3 were fewer by just nine events compared with the sum of H1'07. In addition, eight IPOs raised US$100.00M each; including two IPOs that raised US$1.00B each. China Construction Bank ("CCB") listed on the Shanghai bourse offered US$7.73B, the highest single offer amount in Q3.
The IPO events on Shenzhen SME Board were 35, nearly the sum of those closed in H1'07 on that board. The increase in IPO events lifted the offer amount to US$2.02B, 14.0% of the total and higher by US$449.00M versus the sum of that in H1'07. Shanghai Stock Exchange attracted five enterprises in Q3. Though the IPO events accounted for only 12.5% of the total, the offer amount hit US$12.37B, comprising 86.0% of the total offering domestically. Moreover, the five debuts each raised over US$800.00M and averaged US$2.48B.
By industry, Traditional and Services led in overseas and Chinese domestic IPOs respectively.
Overseas IPOs in Q3 were mainly located in the Traditional sector. 26 Traditional enterprises raised US$6.45B, accounting for 86.4% of the total overseas offer amount. Two and three Chinese listings from Services and Broad IT sectors raised US$332.28M and US$308.56M, comprising 4.4% and 4.1% of the total respectively. In addition, Other Hi-tech and Bio/healthcare each had one IPO with US$191.09M and US$184.65M offered, accounting for 2.6% and 2.5% respectively.
As for the Chinese domestic market, Services remained the lead in offer amount with US$11.22B raised or 78.0% of the total by five IPOs, including four Banking ones and one Tourism debut. The Traditional sector remained the lead in IPO events with 29 debuts but only US$2.94B raised, comprising 20.5% of the total. Five Broad IT shares and one Bio/healthcare share offered US$199.37M and US$21.73M respectively
Overall, 29 VC/PE-backed enterprises raised a total of US$13.80B on Chinese domestic and overseas markets. Therein, thirteen overseas IPOs offered US$1.76B. Relatively, HKMB-listed Hidili Industry and China High Speed Transmission raised higher amounts of US$530.00M and US$316.00M respectively; the former was invested by Baring Fund and the latter by GE Capital and Value Partners.
In general, sixteen Chinese enterprises backed by VC/PE funds raised a combined US$12.04B on domestic bourses. The IPO events and the total offer amount both reached historical highs and exceeded the overall performances of those in the whole year 2006. The VC/PE-backed IPO events and offer amount were more by three ones and US$10.29B than its overseas peer. The active exits via IPO were due largely to the following three reasons. First, the increasingly sound domestic capital market was attractive to VC/PE funds. Second, overseas listing via the red-chip approach met blocking from Chinese laws, thus the Chinese domestic market became the alternative choice for VC/PE funds to exit their investments. Third, China Securities Regulatory Commission ("CSRC") enhanced its IPO review speed.
For the similar overseas IPO environment in the coming Q4, we expect Chinese enterprises overseas IPOs will continue to be featured as follows: First, HKMB will remain the champion in attracting Chinese enterprises, mega IPO may occur in this market. Second, the single offer size will remain small.
As for the Chinese domestic market, Q4 may create a new high in IPOs in the context of the current gentle inflation and active domestic capital market. However, we should notice evidence of the regulatory authorities having slowed down the review speed of new shares.
