565 Chinese firms net $132.7b from public offerings in China, US

Chinese companies raised record funds via initial public offerings last year as the country's ongoing capital market reforms continued to boost long-term investment value for investors, a new industry report said.

According to a report published by CVSource, an information service provider, 565 Chinese companies were newly listed on bourses in the Chinese mainland, Hong Kong, and the United States last year, up 51.47 percent on a yearly basis. Together, these companies raised 860.7 billion yuan ($132.72 billion), up 67.22 percent on a yearly basis and a new 10-year high.

Three Chinese mainland companies were among the biggest global IPOs last year. Chip giant Semiconductor Manufacturing International Corp raised $7.5 billion on the STAR Market in Shanghai, while e-commerce giant JD raised $4.5 billion on the Hong Kong bourse. Beijing-Shanghai High Speed Railway Co Ltd raised $4.4 billion from its IPO in Shanghai.

There was also a steady increase in the number of venture capital and private equity firms participating in the IPOs at 68.32 percent last year. Together, these firms gained exit returns of over 858.8 billion yuan in 2020, the report said.

Nearly 80 percent of the funds invested by the VCs and PEs flowed into sectors like artificial intelligence, medical and healthcare as well as information technology. AI and IT industries, in particular, offered an average tenfold return for these investment firms, it said.

In terms of the number of IPOs invested in, Hillhouse Capital, Sequoia Capital China and Shenzhen Capital Group Co Ltd were among the top three, participating in 26, 24 and 22 IPO deals, respectively.

"The biggest investment opportunity is in China right now. It is the best time for investors to invest in the Chinese market," said Zhang Lei, founder of Hillhouse Capital, adding that the country's healthcare sector would be one of the company's key focus areas.

The report also pointed out that the A-share market was the leader in IPO activities both in deal and fundraising terms, as the registration-based system further boosted the listing speed on the science and technology innovation board, or the STAR Market in Shanghai, and the technology-focused ChiNext on the Shenzhen bourse.

A total of 394 Chinese companies floated IPOs on the Shanghai and Shenzhen stock exchanges, up 96.02 percent on a yearly basis. The total funds raised on the two bourses reached 462.5 billion yuan, up by 85.74 percent on a yearly basis, the highest level since 2011.

"Although COVID-19 had an impact on the global economy, listing activities on the A-share market showed an active trend, mainly due to the rapid and steady economic recovery and the success of the registration-based system," said Liang Weijian, a partner at PwC China.

The global consulting firm said that 430 to 490 firms will raise a record 450 billion yuan to 480 billion yuan from the A-share market this year.