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Greater China IPO Watch surveys stock market listings in Greater China and provides a comparison with the world’s major markets

Greater China IPO Watch 2015

Greater China IPO Watch 2015 1

The Hong Kong stock market consists of two separate boards: the Main Board (MB) and the Growth Enterprise Market (GEM). The MB facilitates fund raising by companies with track records of certain minimum profit, revenue, operating cash flow and/or market capitalisation levels as set out in the Hong Kong listing rules. The GEM focuses on companies which do not fulfil the profitability/track record requirements of the Main Board but have growth potential and a minimum level of positive operating cash flow. Companies established in mainland China (the People’s Republic of China) that are listed in Hong Kong are referred to as H-share companies. Companies owned by mainland China nationals or enterprises which are listed in Hong Kong through Hong Kong or overseas incorporated holding companies are referred to as Red Chip companies.

Both the Shanghai and Shenzhen Stock Exchanges consist of A-share and B-share listing platforms on which companies established in mainland China can list. The Shenzhen Stock Exchange has a Small and Medium Enterprise (SME) Board and a ChiNext Board to facilitate fund-raising of small and medium-sized enterprises and growing venture enterprises. Shanghai and Shenzhen A-share, and shares listed on SME and ChiNext can only be traded by mainland China nationals and enterprises, while B-share can only be traded by overseas investors.

National Equities Exchange and Quotation system in mainland China, which serves as a national share transfer system for SMEs to transfer shares and raise funds, is not covered within this review as it relates to smaller enterprises.

The Taiwan Stock Exchange (TSEC) facilitates capital raising by companies (both Taiwan and foreign companies) with track records of certain minimum profit and capital base. Technology-based companies without track records but with a certain minimum amount of paid-in capital and projected net worth can also be listed. Most of the companies in Taiwan have to list their shares for a minimum of six months on the over-the-counter market, Emerging Stock on the Gretai Securities Market (GTSM) before listing on TSEC. This review does not include data from the GTSM.

This Greater China IPO Watch provides an overview of the initial public offerings (IPOs) and listing activities on Greater China’s principal stock markets, including Hong Kong, Shanghai, Shenzhen and Taiwan. The analysis covers companies which were listed on these markets from 1 January to 31 December 2015. For comparability purposes, all figures in this report have been translated into United States Dollars (USD) at the applicable closing exchange rate at the end of each year.

Initial public offering in this publication is defined to include all share listings on a platform where the entity’s shares have not been listed previously.

This report has been prepared by the China/Hong Kong Capital Market Services practice of PwC.

Introduction to the four stock markets

Contents

Page

Foreword 4

Overview of the IPO markets in Greater China 6

IPOs by stock exchange 7

IPO vs. other equity fund raising 8

IPOs by P/E multiples 9

IPOs by share price performance on the first day of listing 10

IPOs by industry sector 12

Turnover value and market capitalisation 13

Top ten IPOs in Greater China from 2011 to 2015 14

Top ten IPOs in world history and top ten IPOs worldwide in 2015 15

Comparison with the US markets 16

Comparison with the European markets 17

Comparison with other major Asian markets 18

Debt issued in China and Hong Kong 19

4 Greater China IPO Watch 2015

This closer collaboration between Hong Kong and mainland regulators is likely to continue which should facilitate mainland-based small and medium-sized enterprises to seek listings in Hong Kong.

China is undoubtedly adjusting to a ‘new normal’. But even with moderate growth, China will continue to enjoy a significantly higher growth than other major markets. We believe there is an appetite among investors in companies that will benefit from the continued growth of China’s economy.

The Hong Kong Stock Exchange is expected to remain popular with mainland enterprises as it has a proven platform to raise funds and is highly transparent, supported by a good track record, and is well regulated.

The long term fundamentals in the region remain relatively attractive compared to other major markets with GDP growth and urbanisation forecast to continue, the region’s capital markets are expected to strengthen in 2016, following a period of regulatory reform and a continued clear pro-growth strategy by the leadership in China creating a supportive environment for IPOs.

Foreword

In 2015, the Greater China stock exchanges showed continued growth in IPO volumes following the rebound seen in 2014. This was primarily driven by growth in the mainland China IPO markets during the first half of the year. The Greater China stock exchanges had 381 IPOs, with total funds raised of USD 58.8 billion.

The positive momentum from 2014 continued through to the first half of 2015. The Greater China IPO market slowed in the second half of the year following volatile equity prices in mainland China, resulting in a period of closure of the mainland IPO markets. However, a number of mega-sized IPOs – those raising over USD 1 billion each – were successfully launched in the second half of the year, showing continued interest in new issuers.

The Hong Kong Stock Exchange was the primary capital raising centre, accounting for almost 58% of IPOs by value and 36% by number in 2015.

2015 was the first full year of the Shanghai-Hong Kong Stock Connect pilot programme which allows mainland investors to access Hong Kong equities and vice-versa. The controlled introduction of this pilot programme has had a limited impact on trading volumes in its first full year of operation. However, this has enabled the Hong Kong and mainland regulators to identify and address a number of practical issues which should allow the programme to be expanded to include a wider portfolio of equities and potentially IPOs. Proposals are also underway for further links between Hong Kong and other exchanges such as Shenzhen and even London.

However, the global investment backdrop remains uncertain with further interest rate rises inevitable in the medium term and geopolitical concerns remaining. This emphases the need for companies to be confident in their chosen strategy and for listing applicants to be IPO ready in order to take advantage of the continued short IPO windows.

The high level trends in IPO volumes tend to closely follow the economic cycle, with strong correlations seen between the volume and value of IPOs and equity prices. The equity markets historically lead the business cycle by four to six months and, as the IPO process itself takes on average from between four to six months, IPO volumes are likely to lag behind movements in equity prices and closely follow the economic cycle. Economic policy and economic indicators therefore play an important role in predicting IPO volumes.


Kennedy LiuCapital Markets and Accounting Advisory Services LeaderPwC China and Hong Kong

In contrast with the US and the UK, we expect the European Central Bank, the Bank of Japan and the People’s Bank of China to maintain an accommodative monetary policy stance in 2016. Regulatory reform of the mainland’s capital markets is also expected to continue with the current pro-growth strategy from the leadership in China. These are positive factors for the equity markets in Greater China and should therefore create a supportive environment for IPOs.

China’s economic rebalancing looks set to continue with growth in manufacturing and exports to continue to slow gradually with GDP growth forecast to ease to 6.5%. However, Chinese business leaders will continue to move into higher value added areas of manufacturing.

To meet this goal, overseas investment by Chinese companies is anticipated to pick up, particularly through the acquisition of businesses involved in new technologies and research and development activities.

This outbound investment and redeployment of capital is expected to sustain the supply of IPO candidates due to business seeking additional funds to deploy and also investors subsequently wishing to divest overseas investments via spin offs.

Investor demand for new issuers from Greater China is anticipated to continue as the long term fundamentals in the region remain relatively attractive compared to other major markets with GDP growth and urbanisation forecast to continue.

Inevitable risks remain, however considering both demand and supply side factors, the Greater China IPO markets are expected to continue their growth in 2016.


Overview of the IPO markets in Greater China

The number of IPOs in Greater China increased from 268 in 2014 to 381 in 2015. The amount of funds raised from IPOs increased by 35% from USD 43.4 billion in 2014 to USD 58.8 billion in 2015. This increase in IPO volumes and funds raised was primarily driven by the mainland stock exchanges despite closed for IPO for approximately four months during the year.

Number of IPOs from 2011 to 2015

Number of IPOs

2011

2012

2013

2014

2015

Year

432

241

144

268

381

Amount of IPO funds raised from 2011 to 2015

2011

2012

2013

2014

2015

Year USD billion

81

29.4

22.6

43.4

58.8

Source: PwC Research


IPOs by stock exchange

In aggregate, deal volumes increased across the Greater China markets by 42% compared to 2014 primarily due to mainland listings where 219 companies completed IPOs compared to 125 in 2014.

Shanghai showed a 107% increase in IPO volumes from 43 in 2014 to 89 in 2015, with a 204% increase in funds raised from USD 5.5 billion in 2014 to USD 16.7 billion.

Shenzhen showed a 59% increase in IPO volumes from 82 in 2014 to 130 in 2015. The majority of these IPOs were of small

and medium-sized enterprises on the ChiNext exchange, resulting in IPO funds raised in Shenzhen increased by only 7% compared to 2014.

Hong Kong also showed an increase in volumes and proceeds indicating improved market sentiment and investor confidence.

The Hong Kong Main Board hosted 104 IPOs compared to 103 in 2014, exceeding the 100 mark seen for active years, with an increase in IPO funds raised of 13%, rising to USD 33.5 billion.

Hong Kong’s GEM Board had a strong year in terms of IPO volumes, attracting 34 new listing applicants in 2015 compared to 19 in 2014. IPO funds raised remained at USD 0.3 billion.

The Taiwan Stock Exchange continued to operate at levels seen in 2014, with 24 IPOs raising USD 0.6 billion, compared to 21 in 2014 which raised USD 0.7 billion.

(Funds raised in USD billion)

Hong Kong Main Board

Hong Kong GEM Shanghai A

Shenzhen SME Board

Shenzhen ChiNext Taiwan Total

2011No. of IPOs 89*+# 13 39 115 128 48 432

% of total 20.6% 3.0% 9.0% 26.6% 29.7% 11.1% 100.0%Funds raised 34.9 0.2 16.7 16.2 12.5 0.5 81.0

% of total 43.1% 0.3% 20.6% 20.0% 15.4% 0.6% 100.0%

2012No. of IPOs 52# 12 26 55 74 22 241


% of total 38.8% 0.7% 20.7% 19.0% 19.4% 1.4% 100.0%

2013No. of IPOs 89*# 23 - - - 32 144

% of total 61.8% 16.0% 0.0% 0.0% 0.0% 22.2% 100.0%Funds raised 21.7 0.4 - - - 0.5 22.6

% of total 96.0% 1.8% 0.0% 0.0% 0.0% 2.2% 100.0%

2014No. of IPOs 103# 19 43 31 51 21 268


% of total 68.4% 0.7% 12.7% 8.3% 8.3% 1.6% 100.0%

2015No. of IPOs 104# 34 89 44 86 24 381


% of total 57.0% 0.5% 28.4% 4.8% 8.3% 1.0% 100.0%

* included Real Estate Investment Trusts (REITs): 1 in 2011 and 2 in 2013+ included Hong Kong Depositary Receipts (HDR): 2 in 2011# included listing by introduction & switch from GEM to Main Board without raising funds in Hong Kong: 20 in 2011, 4 in 2012, 13 in 2013 and 13 in 2014 and 17 in 2015



IPO vs. other equity fund raising

The relative proportion of funds raised from IPOs in Greater China versus total equity funds raised decreased from 17% in 2014 to 15% in 2015. This was primarily due to the increase in other equity funds raised in Shanghai which increased by over 80% in 2015 to USD 117.6 billion as larger companies continued to recapitalise and strengthen their balance sheets.

In Shenzhen, which hosts a greater number of emerging and growth companies, other equity funds raised increased by 53% from USD 62.4 billion in 2014 to USD 95.5 billion, reflecting a number of maturing businesses entering the next stage in their growth cycle.

In Hong Kong, USD 109.4 billion was raised through other equity fund raising. The relative proportion of other equity funds was 76%, consistent with that shown in 2014, reflecting a period of sustained recapitalisation by listed companies.

Total equity funds raised from 2011 to 2015

Hong Kong Shanghai Shenzhen Taiwan Greater China total

(Amount in USD billion) Amount % Amount % Amount % Amount % Amount %

2011

IPO funds raised 35.1 54% 16.7 32% 28.7 40% 0.5 12% 81.0 42%

Other equity funds raised 29.5 46% 34.7 68% 42.4 60% 3.5 88% 110.1 58%

Total equity funds raised 64.6 100% 51.4 100% 71.1 100% 4.0 100% 191.1 100%

2012

IPO funds raised 11.6 30% 6.1 13% 11.3 34% 0.4 15% 29.4 24%



2013

IPO funds raised 22.1 45% 0.0 0% 0.0 0% 0.5 13% 22.6 18%



2014

IPO funds raised 30.0 25% 5.5 9% 7.2 10% 0.7 21% 43.4 17%



2015

IPO funds raised 33.8 24% 16.7 12% 7.7 7% 0.6 14% 58.8 15%




US

D b

illio

n

Other equity funds raised

IPO funds raised

Year

20152011 2012 2013 2014

81

29.4 22.6

110.1

92.6100.8

43.4

215.1

58.8

326.1

326.1


IPOs by P/E multiples

In 2015, there was an overall increase in P/E multiples in Greater China for IPOs, reflecting the greater proportion of IPOs on the mainland which generally command higher multiples due to high demand and limited supply. The percentage of IPOs offered at a P/E multiple of over 20 times increased from 51% to 64%.

Shanghai showed a significant increase in P/E multiples with 87% of IPOs offered at P/E multiples of above 20, compared to 67% in 2014. P/E multiples in Shenzhen were relatively consistent with those shown in 2014, with approximately 80% being offered at multiples above 20.

Hong Kong showed an increase in P/E multiples with 36% of IPOs offered at P/E multiples of above 20, compared to 28% in 2014.

In Taiwan, P/E multiples decreased marginally compared to those seen in 2014 with around a third of IPOs with a P/E greater than 15 times.

P/E ratio

P/E ratio by Stock Exchange 2013



Num

ber

of I

PO

s

20152013 2014

0

50

100

150

200

250

N/A100-199.99

50-99.99

30-49.99

20-29.99

15-19.99

10-14.99

5-9.99

<5

4 833 30 26 3340 50

184352

18

93

203

102818 6 7 5 2

2219 25

<5 5-9.99

10-14.99

15-19.99

20-29.99

30-49.99

50-99.99

100-299.99

N/A

Num

ber

of I

PO

s

0

20

30

40

50

4

2522

15 15

10 8 11

3 3 28

4 2

19

ShenzhenHong Kong Shanghai Taiwan

3

0

20

30

40

50

3 5 51

25 2521

26

48

17 17

6104 4 6

128

2

19

623 12

nShenzhenHong Kong Shanghai Taiwa

Num

ber

of I

PO

s

<5 5-9.99

10-14.99

15-19.99

20-29.99

30-49.99

50-99.99

100-299.99

N/A

0

50

100

150


Num

ber

of I

PO

s

2335

1 2 1 14311 17 15 211 2 5 2 411

20 20

76

106

N/A100-199.99

50-99.99

30-49.99

20-29.99

15-19.99

10-14.99

5-9.99

<5



IPOs by share price performance on the first day of listing

Around 89% of new listings in 2015 closed their first day of trading with a price above the IPO issue price indicating continued favourable pricing for IPO investors. In 2015, 10% of IPOs enabled investors to have a first day gain of more than 50% compared to 8% in 2014, including 24% of IPOs in Hong Kong.

Share price performance by year — % change of first day closing price over IPO price

0

50

100

150

200

250

Num

ber

of I

PO

s

2013 2014 2015

N/A-20% to -39.99%

-10% to -19.99%

-0.01% to -9.99%

0% to 9.99%

10% to 19.99%

20% to 49.99%

50% to 99.99%

100% to199.99%

200% to 299.99%

300% to 599.99%

600% to 999.99%

1000% to 1999.99%

2000% to 3000%

3 7 5 58242827 323336

19 141127

12 5 5 4 6 1 2 1 3 7 5 71 8 21617 21

7

146

238


% change of first day closing price over IPO price 2013

40

Num

ber

of I

PO

s


5

24

1 3

27

5

127

18

95 7

41

-10% to-19.99%

-0.01% to -9.99%

0% to9.99%

10% to 19.99%

20% to 49.99%

50% to 99.99%

100% to 199.99%

200% to 299.99%

300% to599.99%

N/A

13

3

0

10

20

30


Num

ber

of I

PO

s

0

20

40

60

80

100

-20% to-39.99%

-10% to-19.99%

-0.01% to -9.99%

0% to9.99%

10% to19.99%

20% to49.99%

50% to99.99%

100% to199.99%

200% to299.99%

300% to599.99%

600% to800%

N/A

3 7

27

1 1

31

2 1 111

112

42

81

114 2 6

13


4 1 2 4



0

50

100

150


N/A-20% to -39.99%

-10% to -19.99%

-0.01% to -9.99%

0% to 9.99%

10% to 19.99%

20% to 49.99%

50% to 99.99%

100% to 199.99%

200% to 299.99%

300% to 599.99%

600% to 999.99%

1000% to 1999.99%

2000% to 3000%

7 4 1

23

4

32

4

89

130

124 3 6 1 5 7 8 2

1741

10 7

Num

ber

of I

PO

s


IPOs by industry sector

Most of the IPO candidates in Greater China are from the retail, consumer goods and services sector, which represented 47%, 45% and 45% of the total number of IPOs in 2013, 2014 and 2015 respectively.

The relative proportion of IPOs in the information technology and telecommunications sector fell from 15% in 2014 to 8% in 2015 with a corresponding increase in the relative proportion of applicants from the

Number of IPOs by industry sector

industrial sector which increased from 26% in 2014 to 35% in 2015. The industrial sector also reported an increase in the relative proportion of funds raised from 15% in 2014 to 19% in 2015 due to an increase in funds raised from USD 6.4 billion in 2014 to USD 11 billion in 2015.

The relative proportion of IPOs from the financial sector in 2015 remained at 7%. However, the relative proportion of IPO funds raised by the financial sector

Funds raised by industry sector


Energy & utilities

Industrials

Financials

Retail, consumer goods & services

Information technology & telecommunications

5%50%2013

2014

2015

3% 11% 31%

21% 22% 8% 15% 34%

6% 43% 19% 28%

Total: USD 22.6 billion



4%

12%19%2013

2014

2015

3% 19% 47%

7% 7% 15% 26% 45%

5% 7% 8% 35% 45%

Total: 144

Total: 268

Total: 381

increased from 22% in 2014 to 43% in 2015. This was due to six of the top ten IPOs in Greater China being from the financial sector, raising a combined USD 20 billion.

The amount of funds raised in the energy and utilities sector decreased from USD 9 billion in 2014 to USD 3.7 billion in 2015 primarily due to the Hong Kong IPOs of CGN Power and Hong Kong Electric Investments in 2014 which raised a combined USD 6.7 billion.


Turnover value and market capitalisation

The market capitalisation of the Greater China capital markets increased by 20% in 2015 compared to 2014 with a corresponding 7% net increase in the number of listed companies.

The turnover value of the Greater China capital markets increased by 191% in 2015 compared to 2014, reaching record levels. This was primarily driven by significant increases in Shanghai (238%) and Shenzhen (219%).

Turnover in the Greater China capital markets for 2015 was 357% of its closing market capitalisation in 2015 (2014: 147%); while it was 34% (2014: 42%) in the United Kingdom and 120% (2014: 107%) in the United States.

Market data as of 31 Dec

(Amount in USD billion)

2013 2014 2015

Stock Exchange

Number of listed

companiesTurnover

valueMarket

capitalisation

Number of listed

companiesTurnover

valueMarket

capitalisation

Number of listed

companiesTurnover

valueMarket

capitalisation

Hong Kong Main Board

1,451 1,958.5 3,084.9 1,548 2,190.8 3,209.7 1,644 3,333.3 3,151.3

Hong Kong GEM Board

192 10.2 17.3 204 21.3 23.1 222 32.9 33.3

Shanghai A 944 3,780.3 2,483.8 986 6,045.7 3,917.7 1,073 20,396.6 4,531

Shanghai B 53 11.4 12.5 53 7.8 14 52 36.3 19.2

Shenzhen A* 1,524 3,080.3 1,187.4 1,606 5,902 2,058.3 1,735 18,861 3,624.6

Shenzhen B 53 12.4 15.1 51 8.4 13.7 49 20.7 14.8

Taiwan 838 635 822 854 692 849.8 874 615.1 746.4

Total 5,055 9,488.1 7,623 5,302 14,868 10,086.3 5,649 43,295.9 12,120.6

* include Shenzhen SME Board and Shenzhen ChiNext



The top ten IPOs in Greater China accounted for 46% of the total funds from IPOs in 2015 (2014: 48%).

Over the last five years, Hong Kong and Shanghai have consistently hosted the largest IPOs in Greater China. The ability of these two markets to absorb large IPOs demonstrates the significant capital pool available in Greater China. In 2015, 12 IPOs each raised over USD 1 billion, compared to 9 in 2014 and 6 in 2013.

Average deal sizes of the top ten IPOs increased from USD 2.1 billion in 2014 to USD 2.7 billion in 2015. Hong Kong again led the way for larger IPOs, notably in the financial sector, with HTSC, GF Securities, China Huarong Asset Management and China Reinsurance representing 52% of the top ten IPOs.

2011 Company

Funds raised (USD million)

Stock Exchange

Glencore International plc 10,010^ Hong Kong

PRADA S.p.A. 2,476 Hong Kong

Sinohydro Group Ltd 2,142 Shanghai

Shanghai Pharmaceuticals Holding Co Ltd 2,062 Hong Kong

Chow Tai Fook Jewellery Group Ltd 2,059 Hong Kong

CITIC Securities Co Ltd 1,834 Hong Kong

MGM China Holdings Ltd 1,618 Hong Kong

Sinovel Wind Group Co Ltd 1,501 Shanghai

New China Life Insurance Co Ltd 1,325 Hong Kong

Samsonite International S.A. 1,299 Hong Kong

Total 26,326 (32%)

2012 Company

Funds raised (USD

million)Stock

Exchange

The People’s Insurance Co (Group) of China Ltd 3,562 Hong Kong

Haitong Securities Co Ltd 1,856 Hong Kong

China Communications Construction Co Ltd 1,170 Shanghai

Inner Mongolia Yitai Coal Co Ltd 904 Hong Kong

Sunshine Oilsands Ltd 579 Hong Kong

China Machinery Engineering Corporation 575 Hong Kong

CITIC Heavy Industries Co Ltd 513 Shanghai

Shanghai Fosun Pharmaceutical (Group) Co Ltd

512 Hong Kong

Guangzhou Automobile Group Co Ltd 419 Shanghai

Huadian Fuxin Energy Corporation Ltd 345 Hong Kong

Total 10,435 (36%)

2013 Company


Stock Exchange

China Everbright Bank Co Ltd 3,205 Hong Kong

China Cinda Asset Management Co Ltd 2,824 Hong Kong

SINOPEC Engineering (Group) Co Ltd 1,798 Hong Kong

China Huishan Dairy Holdings Co Ltd 1,500 Hong Kong

Huishang Bank Corporation Ltd 1,368 Hong Kong

China Galaxy Securities Co Ltd 1,098 Hong Kong

Qinhuangdao Port Co Ltd 562 Hong Kong

Bank of Chongqing Co Ltd 559 Hong Kong

Langham Hospitality Investments and Langham Hospitality Investments Ltd

549 Hong Kong

China Conch Venture Holdings Ltd 533 Hong Kong

Total 13,996 (63%)

2014 Company


Stock Exchange

Dalian Wanda Commercial Properties Co Ltd 4,039 Hong Kong

CGN Power Co Ltd 3,638 Hong Kong

HK Electric Investments Ltd 3,111 Hong Kong

WH Group Ltd 2,360 Hong Kong

BAIC Motor Corporation Ltd 1,532 Hong Kong

Shengjing Bank Co Ltd 1,502 Hong Kong

China CNR Corporation Ltd 1,293 Hong Kong

Harbin Bank Co Ltd 1,131 Hong Kong

Guosen Securities Co Ltd 1,127 Shenzhen SME

Luye Pharma Group Ltd 878 Hong Kong

Total 20,611 (48%)

^include Hong Kong and international offering


Top ten IPOs in Greater China from 2011 to 2015

2015 Company


Stock Exchange

HTSC 5,000 Hong Kong

Guotai Junan Securities Co Ltd 4,633 Shanghai

GF Securities Co Ltd 4,139 Hong Kong

China Huarong Asset Management Co Ltd 2,541 Hong Kong

China Reinsurance (Group) Corporation 2,115 Hong Kong

China National Nuclear Power Co Ltd 2,033 Shanghai

Legend Holdings Corporation 1,975 Hong Kong

China Energy Engineering Corporation Ltd 1,900 Hong Kong

Orient Securities Co Ltd 1,546 Shanghai

China Railway Signal & Communication Corporation Ltd

1,455 Hong Kong

Total 27,337 (46%)


Top ten IPOs in world history

Top ten IPOs worldwide in 2015

The top four IPOs in world history are based in China/Hong Kong.

Greater China stock exchanges account for three out of the top ten IPOs in world history. In 2014, Alibaba Group, the China-based e-commerce business, completed an IPO on the New York Stock Exchange raising USD 25 billion, the largest IPO recorded, surpassing the IPO of Agricultural Bank of China Limited in 2010 which raised a total of USD 22.4 billion. The IPO of Industrial and Commercial Bank of China Ltd is the third largest IPO in world history, raising USD 22 billion in 2006.

Three of the top ten IPOs in the world in 2015 were from Greater China, two of which were in Hong Kong with one in Shanghai.

Rank Listing year Company Stock Exchange Country USD million

1 2014 Alibaba Group Holding Ltd New York China 25,032

2 2010 Agricultural Bank of China Ltd Hong Kong & Shanghai China 22,430

3 2006 Industrial and Commercial Bank of China Ltd Hong Kong & Shanghai China 22,041

4 2010 AIA Group Ltd Hong Kong China (Hong Kong) 20,465

5 2008 VISA Inc New York United States 19,650

6 1998 NTT Mobile Communications Network Inc Tokyo Japan 18,379

7 2010 General Motors Co Ltd New York United States 18,140

8 1999 Ente Nazionale per I'Energia Elettrica Milan Italy 17,408

9 2012 Facebook Inc NASDAQ United States 16,007

10 1996 Deutsche Telekom Frankfurt Germany 13,036

Source: Thomson Financial

Rank Listing month Company Stock Exchange Country USD million

1 November Japan Post Holdings Co Ltd Tokyo Japan 5,726

2 November Japan Post Bank Co Ltd Tokyo Japan 5,006

3 June HTSC Hong Kong China 5,000

4 February Aena SA Madrid Spain 4,829

5 June Guotai Junan Securities Co Ltd Shanghai China 4,633

6 April GF Securities Co Ltd Hong Kong China 4,139

7 November ABN Amro Group NV Euronext Amsterdam Netherlands 4,119

8 October Worldpay Group PLC London United Kingdom 3,788

9 October Poste Italiane SpA Milan Italy 3,452

10 October First Data Corp New York United States 2,817

Source: Thomson Financial


The amount of IPO funds raised in the US markets (NYSE and NASDAQ) decreased by 62% from USD 87 billion in 2014 to USD 33.1 billion in 2015, with a 36% decrease in IPO volumes. The decrease in IPO funds raised is partly due to the absence of mega IPOs in the US in 2015. The IPO of the China based Alibaba Group on NYSE in 2014 individually raised USD 25 billion.

Comparison with the US markets


2013 2014 2015

Stock ExchangeNumber of

IPOsFunds raised

Average deal size

Number of IPOs

Funds raised

Average deal size

Number of IPOs

Funds raised

Average deal size

Hong Kong 112 22.1 122 30.0 138 33.8

Shanghai - - 43 5.5 89 16.7

Shenzhen - - 82 7.2 130 7.7

Taiwan 32 0.5 21 0.7 24 0.6

Greater China total 144 22.6 0.16 268 43.4 0.16 381 58.8 0.15

NASDAQ 118 15.3 187 21.5 141 16.2

NYSE 120 41.5 114 65.5 51 16.9

NASDAQ + NYSE total 238 56.8 0.24 301 87.0 0.29 192 33.1 0.17


The average deal size in the US decreased from USD 0.29 billion in 2014 to USD 0.17 billion in 2015. Excluding the Alibaba Group IPO, the average deal size decreased from USD 0.21 billion in 2014 to USD 0.17 billion in 2015.

The average deal size in Greater China was USD 0.15 billion in 2015 which is consistent with that seen in 2014.

The value of equity trading in Greater China increased by 191% to USD 43,296 billion in 2015 and overtook the US markets to show the highest value of equity trading in the world. The value of equity trading in the US increased by 7% to USD 29,992 billion in 2015 compared to USD 28,105 billion in 2014.

Value of equity trading

US

D b

illio

n

Greater China

9,488

14,868

43,296

NASDAQ

9,584

12,237

12,515

NYSE

13,700

15,868

17,477

2014 20152013


Comparison with the European markets

The IPO markets in Europe (including exchanges in the European Union member countries plus Switzerland and Norway) decreased 3% by volume but increased 6% by funds raised. In 2015, the number of European IPOs decreased to 364, well below the 430 IPOs recorded in 2011. Average deal size remained stable at USD 0.17 billion in 2015 compared to USD 0.16 billion in 2014.

Value of equity trading

Europe

US

D b

illio

n

Greater China

9,488

14,868

43,296

9,092

9,282

13,232

2014 20152013


2013 2014 2015


IPOsFunds raised

Average deal size

Number of IPOs

Funds raised

Average deal size

Number of IPOs

Funds raised

Average deal size

Hong Kong 112 22.1 122 30.0 138 33.8

Shanghai - - 43 5.5 89 16.7

Shenzhen - - 82 7.2 130 7.7

Taiwan 32 0.5 21 0.7 24 0.6


London (Main Board) 35 16.9 53 18.7 55 15.8

London (AIM, SFM, PSM ) 68 2.9 84 4.2 37 2

London total 103 19.8 0.19 137 22.9 0.17 92 17.8 0.19

Europe total 279 36.4 0.13 375 58.6 0.16 364 62.3 0.17


In 2015, USD 58.8 billion of IPO funds were raised in Greater China by 381 IPOs, representing an average deal size of USD 0.15 billion, consistent with that seen in Europe.

The value of equity trading in Europe increased by 43% from USD 9,282 billion in 2014 to USD 13,232 billion in 2015, exceeding the levels experienced in 2011.


Comparison with major Asian markets

The number of IPOs in Japan increased from 83 in 2014 to 98 in 2015. The IPO funds raised in Japan increased significantly from USD 10.8 billion in 2014 to USD 17.3 billion in 2015. This increase was primarily due to the simultaneous IPOs of Japan Post Holdings and Japan Post Bank which raised USD 10.7 billion.

The number of IPOs in Singapore (including Main Board and Catalist) decreased from 28 in 2014 to 13 in 2015. IPO funds raised decreased significantly from USD 2.5 billion in 2014 to USD 0.4 billion in 2015.

Australia experienced a 27% increase in IPO volumes compared to 2014 with a 62% decrease in funds raised reflecting an absence of mega IPOs in 2015 compared to 2014 where the privatisation of Medibank Private raised USD 4.9 billion alone. Natural resource IPOs continued to be relatively weak reflecting commodity prices. The remaining IPOs mainly comprised technology, media, and telecommunications companies.

Malaysia continued its development as a capital market but, with IPO numbers consistent with 2014 and an increase in IPO proceeds from USD 0.5 billion in 2014 to USD 1 billion.


2013 2014 2015


IPOsFunds raised

Average deal size

Number of IPOs

Funds raised

Average deal size

Number of IPOs

Funds raised

Average deal size

Hong Kong 112 22.1 122 30 138 33.8

Shanghai - - 43 5.5 89 16.7

Shenzhen - - 82 7.2 130 7.7

Taiwan 32 0.5 21 0.7 24 0.6


Japan Exchange Group (Tokyo and Osaka)*

59 9.6 80 10.8 95 17.3

Sapporo - - - - 1 -

Nagoya - - 3 - 1 -

Fukuoka 1 - - - 1 -

Japan total^ 60 9.6 0.16 83 10.8 0.13 98 17.3 0.18

Main Board 14 3.3 10 2.3 1 0.2

Catalist & its predecessor – SESDAQ

12 0.2 18 0.2 12 0.2

Singapore total 26 3.5 0.13 28 2.5 0.09 13 0.4 0.03

Malaysia 17 2.6 0.15 11 0.5 0.05 11 1.0 0.09

Australia 50 5.6 0.11 78 16.3 0.21 99 6.2 0.06

* include J-REIT ^the offering value includes global offering



Debt issued in China and Hong Kong

Mainland China

Mainland China’s bond market is the third largest in the world behind the US and Japan. The market is comprised of the interbank market, which is regulated by the People’s Bank of China, and the stock exchange bond market, which is regulated by the China Securities Regulatory Commission. The interbank market comprises more than 95% of total trading volume.

In 2015, the number of issues increased by 55% compared to 2014 with a 37% increase in amounts raised. The increase in volumes reflects a desire by corporates to diversify funding sources away from equity finance and bank debt.

There has been strong policy support to develop mainland China’s bond markets. During 2015, the People’s Bank of China announced that certain foreign corporates, financial institutions and sovereign entities would have open access to the interbank debt market to issue Renminbi-denominated bonds (so called “Panda” bonds) in mainland China. A number of foreign entities have already taken advantage of this

opportunity. In addition, in early 2016, foreign institutional investors, including commercial banks, insurance companies, asset managers and pension funds, became eligible to invest in China’s domestic interbank market. This move should integrate China’s bond market into the global fixed income system.

Hong Kong

Hong Kong is a liberal debt market where international investors are free to invest in debt instruments and there are no restrictions on foreign borrowers. The bond market in Hong Kong has for some time been a significant market place for issuers and investors, in both domestic and foreign currencies. The range of product offerings, the open access for issuers and investors, both domestic and international, and the increasing significance of offshore Renminbi bond issuances make Hong Kong one of the most frequented international bond markets in Asia. Issuers can select whether they wish to list instruments on the Hong Kong Stock Exchange or issue privately where trading occurs outside stock exchange. Generally, larger issues tend to be completed via a listing.

There was a significant decrease in the volume of debt issues in Hong Kong in 2015. However, this was offset by an increase in average issue size, resulting in an overall decrease in total funds raised of 7% compared to 2014. There was a noticeable move by issuers towards private bonds with 71% of the total issue volume being unlisted in 2015 compared to only 39% in 2014.

Bond issued in Hong Kong

0

50

100

150

200

250

300

2013

7796.9

2014 2015

Number Amount raised (USD billion)

170

74.3

281

124

Bond issued in China

2,542

851.6

3,769

5,851

1,518.5

2013 2014 2015

Number Amount raised (USD billion)

0

1,000

2,000

3,000

4,000

5,000

6,000

1,108.5

Source: Hong Kong Stock Exchange, Thomson Financial and Wind


Capital Market Services practice

The Capital Market Services practice is part of the Assurance practice of PwC. It is comprised of a core team of specialists who provide a broad range of services to companies and/or investment banks in connection with all aspects of capital market transactions. These include preparation for becoming a public listed company, selecting the right market and advisory team, advising on group restructuring, accounting and regulatory issues, and acting as reporting accountants.

The China/Hong Kong Capital Market Services practice is part of the PwC global network of capital markets specialists.

China/Hong Kong Capital Market Services practice partners and directors

Kennedy Liu +852 2289 1881 [email protected]

Edmond Chan +852 2289 1128 [email protected]

Rayon Chu +852 2289 1531 [email protected]

Pauline Leung +852 2289 1809 [email protected]

Xuemei Li +86(10) 6533 2927 [email protected]

Rock Liu +86(10) 6533 2115 [email protected]

Thomas Lo +852 2289 1139 [email protected]

Eddie Wong +852 2289 2896 [email protected]

Doris Tu +86(10) 6533 2850 [email protected]

Jie Shen +86(21) 2323 3659 [email protected]

Laura Butler +86(10) 6533 2363 [email protected]

Rita Chan +852 2289 2327 [email protected]

Geoffrey Tang +852 2289 1886 [email protected]

George Yuen +86(10) 6533 2060 [email protected]

Kenneth Lai +86(10) 6533 8363 [email protected]

About PwC

For more information, please visit: www.pwchk.com or www.pwccn.com

About PwC – Globally At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

PwC – Mainland China, Hong Kong, Taiwan and MacauPwC China, Hong Kong, Taiwan and Macau work together on a collaborative basis, subject to local applicable laws. Collectively, we have around 640 partners and 15,000 people in total.

We provide organisations with the professional service they need, wherever they may be located. Our highly qualified, experienced professionals listen to different points of view to help organisations solve their business issues and identify and maximise the opportunities they seek. Our industry specialisation allows us to help co-create solutions with our clients for their sector of interest.

We are located in these cities: Beijing, Shanghai, Tianjin, Chongqing, Shenyang, Dalian, Xi’an, Chengdu, Qingdao, Nanjing, Suzhou, Wuhan, Hangzhou, Ningbo, Xiamen, Guangzhou, Shenzhen, Hong Kong, Taipei, Chungli, Hsinchu, Kaohsiung, Taichung, Tainan, and Macau.

About Greater China IPO Watch

Greater China IPO Watch surveys all new listings on Greater China’s principal stock markets and market segments. All of the graphs, tables and data used within this publication have been collated or extracted by the Capital Market Services practice research team. In collating and extracting this information, we rely upon data provided directly by various exchanges, and extracted from the World Federation of Exchanges website. We do not carry out any confirmation procedures on that information.

Going public is a major challenge for any company and there are many decisions that will need to be taken prior to an IPO. Management will need to steer the company through a complicated and often time-consuming process in order to be ready for an IPO. Planning and good preparation are crucial for a successful flotation. It is not simply a question of appointing advisors but about ensuring that the company is ready to be listed on the public markets and that it is able to meet the challenges that such a listing brings. If you are planning on listing, there will be many questions you will want to ask. These are just some of the questions we will be able to help you find answers to:

• What is an appropriate valuation for my business?

• What does being a public company really mean?

• How long will it take to complete an IPO?

• Do we have the right resources?

• Are my people ready?

• How to implement a stock based compensation plan?

• Do we have an attractive story for potential investors?

• What is the best way to articulate our strategy?

• What are the corporate governance issues we need to address?

• What are the internal control procedures we need to implement?

• How many non-affiliated/independence directors should we have on the board?

• What are the implications of a concurrent offering of shares to sophisticated investors in the US (via 144A) or elsewhere (via Reg S)?

• How do our accounting policies compare with other companies in the sector?

• Is my finance function ready?

• Are my operations run and managed effectively?

• What additional disclosures will we need to provide as a public company?

• Will it be a problem if one of our subsidiaries has a modified audit opinion?

• Do we need to restate our track record for recent acquisitions and disposals?

• How will an IPO affect our existing incentive arrangements?

• Any other possible listing venues?

How can PwC help?


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