Number of IPOs drops sharply this year

A total of 185 Chinese companies have floated on both domestic and overseas capital markets so far this year, down 44.6 percent from 334 companies in 2011, caijing.com.cn reported Sunday, citing data from Thomson Reuters.

There was also a drastic decline in the amount of capital raised by the initial public offerings (IPOs), partly because of the volatile capital market.

The 185 IPOs raised a total of $20.3 billion, down 62 percent compared with the figure for 2011, according to data from Thomson Reuters.

The amount of capital raised on the mainland capital markets saw a decline of 65 percent to $14.4 billion, said the report, but the amount still accounts for 71 percent of the total funds raised by Chinese companies through IPOs.

"Approvals of new offerings on the mainland market have slowed down this year due to the ongoing reform of the approval system," Ji Li, an analyst at Beijing-based consultancy Zero2IPO, told the Global Times.

Currently, there are as many as 820 companies waiting for approval to float from the China Securities Regulatory Commission (CSRC), a research note from Beijing-based ChinaVenture Investment Consulting Group showed last week.

"It will take at least three years for the CSRC to finish these applications… and amid the sluggish mainland market, the Hong Kong capital market has become the top choice for Chinese companies," Li Ling, an analyst at ChinaVenture, said in the research note.

In the first 11 months this year, a total of 41 domestic companies launched IPOs on the Hong Kong bourse, raising $5.8 billion, according to the ChinaVenture research note.

Meanwhile, listing in the US is no longer such an appealing option for Chinese companies, with investor sentiment diving after a series of financing scandals at US-listed Chinese companies were revealed in 2011.

US short-sellers' negative notes targeting Chinese firms have also made the situation worse.

Only two Chinese companies have floated in the US this year: online luxury goods retailer vipshop.com and social communications platform YY Inc. But nine companies have floated on European capital markets so far this year, such as exchanges in Germany and the UK.

"The IPO destinations for Chinese companies will be further diversified, and as the macro-economic conditions gradually improve, I think the capital market - both domestic and overseas - will be better next year," said Ji.

The People's Insurance Company (Group) of China, one of China's largest insurers, floated on the Hong Kong Stock Exchange on December 7.

The company raised $3.1 billion in the public offering, marking it the largest IPO among Chinese companies so far this year.