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Greater China IPO Watch 2018

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

2 | Greater China IPO Watch 2018

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 2018. 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 mainland China/Hong Kong Capital Market Services practice of PwC.

Greater China IPO Watch 2018 | 3

The Hong Kong stock market consists of two separate boards: the Main Board (MB) and the 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-shares 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.

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.

Introduction to the four stock markets


Contents

6 Foreword

7 Overview of the IPO markets in Greater China

8 IPOs by stock exchange

9 IPO vs. other equity fund raising

10 IPOs by P/E multiples

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

14 IPOs by industry sector


15 Turnover value and market capitalisation

16 Top ten IPOs in Greater China from 2014 to 2018

18 Top ten IPOs in world history

19 Top ten IPOs worldwide in 2018

20 Comparison with the US markets

21 Comparison with the European markets

22 Comparison with major Asian markets

23 Listed debt issued in mainland China and Hong Kong


Kennedy LiuPartner, Head of Capital Markets and Accounting Advisory Services PwC mainland China and Hong Kong

Mainland regulators continue to work on developing a mechanism to allow large Chinese companies listed on overseas exchanges to issue depositary receipts in China which should provide an attractive capital raising alternative to a number of listed issuers.

The long-term fundamentals in the region remain positive with GDP growth and urbanisation forecast to continue, the region’s capital markets are expected to strengthen in 2018, following a period of regulatory reform and a continued pro-growth strategy by the leadership in China creating a supportive environment for IPOs.

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. 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.

Foreword

The global IPO market in 2018 continued the improving trend seen in the second half of 2017 as economic growth continued and volatility remained at low levels creating favourable IPO market conditions. However, this slowed towards the end of the year reflecting reduced levels of investor confidence in the capital markets due to geopolitical instability and rising interest rates.

Overall IPO activity across the region grew with a 10% increase in funds raised. There was an increase in larger IPOs (>USD 1 billion), with the top 10 IPOs contributing 47% of the region’s total IPO proceeds compared to 21% in 2017. This was primarily driven by an increase in the number of IPOs from the information technology and telecommunications sector in 2018.

Hong Kong led the world in terms of the amount of funds raised and produced the highest number of IPOs in the region. IPO volumes increased by 25% from 2017 to USD 36.8 billion, attracting 63% of the region’s funds raised with many enterprises viewing it as their first choice of fundraising platform in Asia and worldwide.

A number of new economy and biotech issuers successfully completed listings in 2018 following recent rule changes which have bolstered Hong Kong’s role as a regional financing platform.

Changes were made to the regulatory review process for IPOs in mainland China to improve the quality of listing applicants in late 2017. This slowed momentum in the mainland China IPO market in 2018 with IPO numbers falling by 76%.


Overview of the IPO markets in Greater China

The amount of funds raised from IPOs increased by 10% from USD 52.1 billion in 2017 to USD 57.5 billion in 2018. The number of IPOs in Greater China decreased from 631 in 2017 to 354 in 2018 reflecting an increase in average IPO sizes. The Greater China Exchanges continued to lead the world in terms of number of IPOs and funds raised.

Number of IPOs from 2014 to 2018

268

381 378

631

354

2014 2015 2016 2017 2018

Num

ber

of

IPO

s

Year

Amount of IPO funds raised from 2014 to 2018

2014 2015 2016 2017 2018

US

D b

illio

n

Year

43.4

58.8

47.352.1

57.5

Source: PwC Research


IPOs by stock exchange

In aggregate, funds raised increased by 10% across the Greater China markets. IPO proceeds in Hong Kong increased by 124% from 2017 rising to USD 36.8 billion, leading the world in terms of funds raised.

IPO volumes increased by over 25% in Hong Kong rising to 218 IPOs compared to 174 in 2017, whereas volumes in Shanghai and Shenzhen decreased by 76% due to changes in the regulatory approval process.

Hong Kong’s GEM had another strong year in terms of IPO volumes, attracting 75 new listing applicants in 2018 compared to 80 in 2017. IPO funds raised remained consistent at USD 0.7 billion.

The Taiwan Stock Exchange hosted 31 IPOs raising USD 0.5 billion, compared to 21 in 2017, raising USD 0.3 billion.

Funds raised in USD billion

Hong Kong Main Board

Hong Kong GEM

Shanghai AShenzhen

SME BoardShenzhen ChiNext

Taiwan Total

2014No. of IPOs 103# 19 43 31 51 21 268% of total 38.4% 7.1% 16.1% 11.6% 19.0% 7.8% 100.0%Funds raised 29.7 0.3 5.5 3.6 3.6 0.7 43.4% of total 68.4% 0.7% 12.7% 8.3% 8.3% 1.6% 100.0%





# included listing by introduction & switch from GEM to Main Board without raising funds in Hong Kong: 13 in 2014, 17 in 2015, 9 in 2016, 14 in 2017 and 13 in 2018.



IPO vs. other equity fund raising

The relative proportion of funds raised from IPOs in Greater China versus total equity funds raised increased from 16% in 2017 to 26% in 2018. This was primarily due to decreases in other equity funds raised in Shenzhen, which decreased by over 53% from USD 106 billion in 2017 to USD 49.9 billion in 2018, in Hong Kong which decreased by 44% from USD 58 billion in 2017 to USD 32.7 billion in 2018, and in Shanghai, which decreased by 20% from USD 95.3 billion in 2017 to USD 76.3 billion in 2018.

Hong Kong Shanghai Shenzhen Taiwan Greater China total

Amount in USD billion Amount % Amount % Amount % Amount % Amount %

2014

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

Other equity funds raised 91.3 75% 58.8 91% 62.4 90% 2.6 79% 215.1 83%

Total equity funds raised 121.3 100% 64.3 100% 69.6 100% 3.3 100% 258.5 100%

2015

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



2016

IPO funds raised 25.2 40% 14.7 13% 7.0 5% 0.4 12% 47.3 14%



2017

IPO funds raised 16.4 22% 21.2 18% 14.2 12% 0.3 4% 52.1 16%



2018

IPO funds raised 36.8 53% 12.7 14% 7.5 13% 0.5 8% 57.5 26%




2014 2015 2016 2017 2018

US

D b

illio

n

Year

Other equity funds raised (USD billion) IPO funds raised (USD billion)

43.458.8

326.1

215.1

47.3

287.9

52.1

265.8

57.5

164.6


IPOs by P/E multiples

In 2018, P/E multiples in Greater China for IPOs increased compared to levels shown in 2017. The percentage of IPOs offered at a P/E multiple of over 30 times was 17% in 2018 compared to 6% in 2017.

P/E multiples in Hong Kong increased, with 27% of IPOs offered at P/E multiples of above 30 compared to 21% in 2017.

P/E multiples in Shanghai decreased from 93% of IPOs offered at P/E multiples of above 20 in 2017 to 74% in 2018.

P/E multiples in Shenzhen decreased from those shown in 2017, with approximately 90% still being offered at multiples above 20 reflecting the high growth nature of the listing companies.

In Taiwan, P/E multiples decreased compared to those seen in 2017 with 66% of IPOs with a P/E less than 10 times.

P/E ratio

337 40 52

211

7 6 2 202040 58

452

21 8 2 1 2 3249

32 47 43

127

28 18 4 244

<5 5-9.99 10-14.99 15-19.99 20-29.99 30-49.99 50-99.99 100-199.99 200-499.99500-999.99 >1000 N/A

Num

ber

of

IPO

s

2016 2017 2018


P/E ratio by stock exchange 2017

<5 5-9.99 10-14.99 15-19.99 20-29.99 30-49.99 50-99.99 100-199.99 200-499.99500-999.99 >1000 N/A

Num

ber

of

IPO

s

Hong Kong Shanghai Shenzhen Taiwan

1332 35 42

207 2 1 1 2

1911

197

1 1 11 1 11

210

2 5 6 1 3 1 5


<5 5-9.99 10-14.99 15-19.99 20-29.99 30-49.99 50-99.99 100-199.99 200-499.99500-999.99 >1000 N/A

Num

ber

of

IPO

s


220 27 22 25

7 6 2156 6

17

74

2 2 10

110

1 9 5 3 2 5


<5 5-9.99 10-14.99 15-19.99 20-29.99 30-49.99 50-99.99 100-199.99 200-499.99500-999.99 >1000 N/A

Num

ber

of

IPO

s


216

4227

4125 17

4 2

42

3 1 11

41

11 4

43

7 124 1 2 2 1 2



IPOs by share price performance on the first day of listing

Around 80% of new listings in 2018 closed their first day of trading with a price above the IPO issue price indicating continued favourable pricing for IPO investors. In 2018, 8% of IPOs enabled investors to have a first day gain of more than 50% compared to 5% in 2017, including 11% of IPOs in Hong Kong.

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

Num

ber

of

IPO

s

2016 2017 2018

2 4 16

46

13

241

12 6 2 6 7 9 1 134 925

59

21

463

15 9 1 4 1 1 21715 18

36

78

25

139

14 11 2 1 15

-20% to-49.99%

-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% to999.99%

1000% to1999.99%

2000% to3000%

N/A


Share price performance – % change of first day closing price over IPO price by stock exchange 2016



112 415

35

9 12 9 6 2 6 7 9 9

103124

11 4 2 3 4

Num

ber

of

IPO

s

-20% to-49.99%

-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% to999.99%

1000% to1999.99%

2000% to3000%

N/A


4 924

55

18 2112 8 1 4 1 1 2

14

214222

1 4 3 6 3 1 3

Num

ber

of

IPO

s

-20% to-49.99%

-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% to999.99%

1000% to1999.99%

2000% to3000%

N/A


Num

ber

of

IPO

s

-20% to-49.99%

-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% to999.99%

1000% to1999.99%

2000% to3000%

N/A


15 1834

77

20 19 10 9 2 113

5748

2 1 515

4 2 2



IPOs by industry sector

Most of the IPO candidates in Greater China are from the retail, consumer goods and services sector, which represented 37%, 40% and 46% of the total number of IPOs in 2016, 2017 and 2018 respectively.

There was an increase in the relative proportion of applicants from the information technology and telecommunication sector from 10% in 2017 to 15% in 2018.

This was accompanied by a significant increase in the relative proportion of funds raised from the information technology and telecommunication sector, from 7% in 2017 to 36% in 2018 reflecting a number of sizeable IPOs, and overtaking the retail, consumer goods and services sector to become the region’s primary sector for fundraising.

There was also an increase in the relative proportion of applicants from the financial sector, from 5% in 2017 to 13% in 2018 and a decrease from the industrial sector from 41% in 2017 to 21% in 2018.

This was offset by a reduction in the relative proportion of funds raised in the industrial sector, which fell from 28% in 2017 to 8% in 2018.

Number of IPOs by industry sector

4% 4% 5%

13%

15%

21%

46%

5%

10%

41%

40%

9%

13%

37%

37%2016

Total number of IPOs:378

2017Total number of IPOs:

631

2018Total number of IPOs:

354

Funds raised by industry sector

2% 4% 3%

19%

36%8%

34%

21%

7%

28%

40%

16%

48%

6%

28%

2016Total IPO funds raised:

USD 47.3 billion


USD 52.1 billion


USD 57.5 billion

Energy & utilities Financials Information technology & telecommunications Industrials Retail, consumer goods & services



Turnover value and market capitalisation

Market data as of 31 Dec (Amount in USD billion)

2016 2017 2018

Stock Exchange

Number of listed

companies

Turnover value

Market capitalisation

Number of listed

companies

Turnover value


Number of listed

companies

Turnover value


Hong Kong Main Board

1,713 2,099.6 3,153.3 1,794 2,758.3 4,313.7 1,926 3,357.4 3,795.1

Hong Kong GEM

260 15.0 40.1 324 19.1 35.9 389 16.3 23.8

Shanghai A 1,175 7,155.5 4,083.5 1,389 7,793.7 5,075.7 1,443 5,838.1 3,906.2

Shanghai B 51 14.2 15.2 51 8.5 15.3 51 5.7 12.0

Shenzhen A* 1,859 11,167.6 3,200.1 2,078 9,471.9 3,609.8 2,124 7,262.2 2,396.7

Shenzhen B 49 7.2 12.4 49 6.5 12.8 48 3.6 8.0

Taiwan 892 518.8 842.9 907 808.5 1,073.6 928 968.7 959.2

Total 5,999 20,977.9 11,347.5 6,592 20,866.5 14,136.8 6,909 17,452.0 11,101.0

* include Shenzhen SME Board and Shenzhen ChiNext


The market capitalisation of the Greater China capital markets reverted to 2017 levels with a 5% net increase in the number of listed companies.

The turnover value of the Greater China capital markets decreased from 2017 levels. This was primarily driven by decreases of 25% in Shanghai and 23% in Shenzhen offset by a 21% increase in Hong Kong.

Turnover in the Greater China capital markets for 2018 was 157% of its closing market capitalisation in 2018 (2017: 148%); while it was 70% (2017: 52%) in the United Kingdom and 119% (2017: 81%) in the United States.


The top ten IPOs in Greater China accounted for 47% of the total funds from IPOs in 2018 (2017: 21%).

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 2018, 7 IPOs each raised over USD 1 billion, compared to 5 in 2017 and 10 in 2016.

Average deal sizes of the top ten IPOs increased from USD 1.1 billion in 2017 to USD 2.7 billion in 2018. Hong Kong again led the way for larger IPOs, notably in the information technology and telecommunications sector.

Top ten IPOs in Greater China from 2014 to 2018

2014

Company Funds raised (USD million) 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%)

2015


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%)


2016


Postal Savings Bank of China Co Ltd 7,629 Hong Kong

China Resources Pharmaceutical Group Ltd 1,942 Hong Kong

China Zheshang Bank Co Ltd 1,938 Hong Kong

Bank of Shanghai Co Ltd 1,537 Shanghai

China Merchants Securities Co Ltd 1,379 Hong Kong

Everbright Securities Co Ltd 1,151 Hong Kong

BOC Aviation Ltd 1,128 Hong Kong

DFZQ 1,080 Hong Kong

CSC Financial Co Ltd 1,057 Hong Kong

Bank of Jiangsu Co Ltd 1,042 Shanghai

Total 19,883 (42%)

2017


Guotai Junan Securities Co Ltd 2,207 Hong Kong

Zhongan Online P & C Insurance Co Ltd 1,750 Hong Kong

China Literature Ltd 1,225 Hong Kong

Zhongyuan Bank Co Ltd 1,190 Hong Kong

Guangzhou Rural Commercial Bank Co Ltd 1,188 Hong Kong

Yixin Group Ltd 866 Hong Kong

China Galaxy Securities Co.,Ltd. 628 Shanghai

Caitong Securities Co.,Ltd. 628 Shanghai

Razer Inc 607 Hong Kong

Huaneng Lancang River Hydropower Inc. 600 Shanghai

Total 10,889 (21%)

2018


China Tower Corporation Ltd 7,507 Hong Kong

Xiaomi Corporation 5,441 Hong Kong

Meituan Dianping 4,232 Hong Kong

Foxconn Industrial Internet Co., Ltd. 3,943 Shanghai

Ping An Healthcare and Technology Co Ltd 1,120 Hong Kong

Jiangxi Bank Co Ltd 1,098 Hong Kong

WuXi AppTec Co Ltd 1,057 Hong Kong

Haidilao International Holding Ltd 965 Hong Kong

BeiGene Ltd 905 Hong Kong

The People's Insurance Company (Group) of China Limited 874 Shanghai

Total 27,142 (47%)



Top ten IPOs in world history

The top four IPOs in world history are based in mainland 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. In 2018, Softbank Corp raised USD 21.1 billion in Japan.

Rank Listing year Company Stock Exchange Country USD million

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

2 2010 Agricultural Bank of China Ltd Hong Kong Stock Exchange & Shanghai Stock Exchange

China 22,430

3 2006 Industrial and Commercial Bank of China Ltd Hong Kong Stock Exchange & Shanghai Stock Exchange

China 22,041

4 2018 Softbank Corp Tokyo Stock Exchange Japan 21,140

5 2010 AIA Group Ltd Hong Kong Stock Exchange China (Hong Kong) 20,465

6 2008 VISA Inc New York Stock Exchange United States 19,650

7 1998 NTT Mobile Communications Network Inc Tokyo Stock Exchange Japan 18,379

8 2010 General Motors Co Ltd New York Stock Exchange United States 18,140

9 1999 Ente Nazionale per I'Energia Elettrica Milan Stock Exchange Italy 17,408

10 2012 Facebook Inc Nasdaq Stock Exchange United States 16,007

Source: Thomson Financial


Top ten IPOs worldwide in 2018

Four of the top ten IPOs in the world in 2018 were from Greater China, compared to one in 2017.

Rank Listing month Company Stock Exchange Country USD million

1 December Softbank Corporation Tokyo Stock Exchange Japan 21,140

2 August China Tower Corporation Ltd Hong Kong Stock Exchange China 7,507

3 July Xiaomi Corporation Hong Kong Stock Exchange China 5,441

4 March Siemens Healthineers Ag Frankfurt Stock Exchange Germany 5,168

5 October Knorr-Bremse AG Frankfurt Stock Exchange Germany 4,432

6 September Meituan Dianping Hong Kong Stock Exchange China 4,232

7 June Foxconn Industrial Internet Co., Ltd. Shanghai Stock Exchange China 3,943

8 May AXA Equitable Holdings Inc New York Stock Exchange United States 3,157

9 January Pagseguro Digital Ltd. New York Stock Exchange United States 2,606

10 March iQIYI Inc Nasdaq Stock Exchange United States 2,424

Source: Thomson Financial


The amount of IPO funds raised in the US markets (NYSE and Nasdaq) increased by 23% from USD 44.4 billion in 2017 to USD 54.7 billion in 2018, with a 22% increase in IPO volumes.

The average deal size in the US was USD 0.23 billion, consistent with that seen in 2017.

The average deal size in Greater China was USD 0.16 billion in 2018 which is double the USD 0.08 billion seen in 2017.

The value of equity trading in Greater China decreased from 2017 levels to around USD 17,452 billion. The value of equity trading in the US increased by 40% to USD 36,131 billion in 2018 compared to USD 25,871 billion in 2017.

Comparison with the US markets

Value of equity trading

Source: World Federation of Exchange website

Greater China Nasdaq NYSE

US

D b

illio

n

20,978

11,071

17,318

20,867

11,336

14,53517,452 16,790

19,341

2016 2017 2018

(Amount in USD billion)

2016 2017 2018

Stock ExchangeNumber of IPOs

Funds raised

Average deal size

Number of IPOs

Funds raised

Average deal size

Number of IPOs

Funds raised

Average deal size

Hong Kong 126 25.2 174 16.4 218 36.8

Shanghai 103 14.7 214 21.2 57 12.7

Shenzhen 124 7.0 222 14.2 48 7.5

Taiwan 25 0.4 21 0.3 31 0.5

Greater China total 378 47.3 0.13 631 52.1 0.08 354 57.5 0.16

Nasdaq 87 10.2 121 15.2 173 26.6

NYSE 35 11.6 78 29.2 69 28.1

Nasdaq + NYSE total 122 21.8 0.18 199 44.4 0.22 242 54.7 0.23



Value of equity trading


Greater China Europe

US

D b

illio

n

20,978

10,653

20,867

11,290

17,452

12,603

2016 2017 2018

Comparison with the European markets

The IPO markets in Europe (including exchanges in the EU member countries plus Switzerland and Norway) decreased 10% by volume and 20% by funds raised in USD terms. In 2018, the average deal size in Europe decreased from USD 0.15 billion in 2017 to USD 0.13 billion in 2018.

In 2018, USD 57.5 billion of IPO funds were raised in Greater China by 354 IPOs, representing an average deal size of USD 0.16 billion, comparable with that seen in Europe.

The value of equity trading in Europe increased by 12% from USD 11,290 billion in 2017 to USD 12,603 billion in 2018.


2016 2017 2018


Funds raised

Average deal size

Number of IPOs

Funds raised

Average deal size

Number of IPOs

Funds raised

Average deal size

Hong Kong 126 25.2 174 16.4 218 36.8

Shanghai 103 14.7 214 21.2 57 12.7

Shenzhen 124 7.0 222 14.2 48 7.5

Taiwan 25 0.4 21 0.3 31 0.5


London (Main Board) 28 5.6 55 12.4 47 10.7

London (AIM, SFM, PSM )

39 1.4 48 2.6 35 1.7

London total 67 7.0 0.10 103 15.0 0.15 82 12.4 0.15

Europe total 265 26.4 0.10 348 52.7 0.15 313 41.9 0.13



Comparison with major Asian markets

The number of IPOs in Japan remained consistent with 2017 at 93. The IPO funds raised in Japan increased from USD 6 billion in 2017 to USD 29.4 billion in 2018, primarily due to the IPO of Softbank Corp which raised USD 21.1 billion alone.

The number of IPOs in Singapore (including Main Board and Catalist) also remained at 2017 levels with 15 IPOs raising USD 0.5 billion in 2018.

Australia experienced a 14% decrease in IPO volumes from 114 in 2017 to 98 in 2018 despite a 30% increase in funds raised reflecting an increase in more sizeable IPOs.

Malaysia continued its development as a capital market with IPO numbers increasing by 70% to 22 in 2018 with a decrease in IPO proceeds from USD 1.7 billion in 2017 to USD 0.1 billion in 2018 due to an absence of larger IPOs.


2016 2017 2018


Funds raised

Average deal size

Number of IPOs

Funds raised

Average deal size

Number of IPOs

Funds raised

Average deal size

Hong Kong 126 25.2 174 16.4 218 36.8

Shanghai 103 14.7 214 21.2 57 12.7

Shenzhen 124 7.0 222 14.2 48 7.5

Taiwan 25 0.4 21 0.3 31 0.5


Japan Exchange Group (Tokyo and Osaka)*

88 9.8 88 6.0 92 29.4

Sapporo Securities Exchange

- - 2 - 1 -

Nagoya Stock Exchange

2 - 2 - - -

Fukuoka Stock Exchange

- - - - - -

Japan total^ 90 9.8 0.11 92 6.0 0.07 93 29.4 0.32

Main Board 6 1.5 2 0.2 3 0.4

Catalist 11 - 13 0.2 12 0.1

Singapore total 17 1.5 0.09 15 0.4 0.03 15 0.5 0.03

Malaysia 12 0.2 0.02 13 1.7 0.13 22 0.1 0.005

Australia 86 5.4 0.06 114 4.9 0.04 98 6.4 0.07

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



Listed debt issued in mainland China and Hong Kong

Mainland China

The Mainland China debt market primarily comprises bonds listed on stock exchanges or the inter-bank market. In 2018, the number of issues increased by 28% compared to 2017 with a 17% increase in amounts raised. This reflects a rising interest rate environment and a policy focus on reducing leverage at domestic institutions. The People’s Bank of China continues to promote open access to certain foreign corporates, financial institutions and sovereign entities to the interbank debt market to issue RMB-denominated bonds (so called ‘Panda’ bonds) in mainland China.

Bond issued in mainland China

Bond issued in Hong Kong

2016 2017 2018

6,845

1,4551,715.5

6,906

5,388

1,698.5

2016 2017 2018

211152.3

99.9

303316

134.6

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 RMB 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. However, a significant number of issuers continue to issue private debt securities which are not listed on an exchange.

There was a 4% decrease in the volume of listed debt issues in Hong Kong in 2018 with a 12% decrease in funds raised reflecting smaller issue sizes compared to 2017.

Source: HKEx, Thomson and Wind

Number

Amount raised (USD billion)


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

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Mainland 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 +86(755) 8261 8990 [email protected]

Pauline Leung +852 2289 1809 [email protected]

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

Thomas Lo +852 2289 1139 [email protected]

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

Eddie Wong +852 2289 2896 [email protected]

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

Fanny Yang +86 (21) 2323 2593 [email protected]

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

Rita Chan +852 2289 2327 [email protected]

Geoffrey Tang +852 2289 1886 [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 158 countries with more than 236,000 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 Macau

PwC China, Hong Kong, Taiwan and Macau work together on a collaborative basis, subject to local applicable laws. Collectively, we have around 720 partners and over 20,000 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.


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’s 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?

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

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.

© 2019 PricewaterhouseCoopers Limited. All rights reserved. PwC refers to the Hong Kong member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. HK-20190221-1-C1

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