Chinese enterprises drive global IPO market

IPOs of Chinese issuers including e-commerce giant Alibaba Group and Dalian Wanda Commercial Properties have boosted the global IPO market to its best performance since 2010, accounting firm Ernst & Young (EY) said Wednesday.

The number of IPOs and capital raised through these IPOs increased by 35 percent and 50 percent respectively in 2014 compared with a year earlier, EY said in a Global IPO report released Wednesday.

This year saw an upsurge in US listings from Chinese mainland companies, with 15 firms having completed IPOs in the US and raised $29.1 billion, representing an increase of 88 percent and 3,191 percent from last year, the report said.

Mainland firms listing on the New York Stock Exchange (NYSE), including Alibaba, raised $25.8 billion, or 35 percent, of total funds raised on the NYSE, according to the report.

Alibaba raised $25 billion on the NYSE in September to become the largest IPO ever in US history.

Listing in the US could help increase these companies' influence in the US market as Chinese firms engage in internationalization and seek clients around the world, Yin Toa Lee, partner in capital markets for the Asia-Pacific region at EY, told the Global Times on Wednesday.

Chinese firms in the Internet, high-tech and healthcare sectors showed great interest in US listings this year and the accelerated overseas IPOs from Chinese firms are expected to continue in 2015, Lee said.

Four out of the top 10 global IPOs in 2014 were those of Chinese mainland and Hong Kong-based firms, which include CGN Power's $3.17 billion IPO and HK Electric Investments' $3.11 billion IPO in Hong Kong.

After the launch of the Shanghai-Hong Kong Stock Connect program on November 17, which gives investors mutual market access, the number of mainland firms aiming for Hong Kong listings is also expected to increase in the coming months, Lee said.

Even before the program, the number has been rising. This year, mainland firms raised $24.7 billion in Hong Kong, accounting for 86 percent of total funds raised in Hong Kong's capital market.

One of the major reasons for IPOs to be launched in Hong Kong rather than in Shanghai is because of the shorter time required to obtain IPO approval, Lee said.

As of October 10, 2014, media reports said there were still 590 Chinese firms waiting in line for IPO approval in mainland bourses.