By Prudence Ho
HONG KONG--A rush of multibillion-dollar initial public
offerings in the last month has pushed this city into second place
in the global IPO rankings, behind New York, home to the record
Alibaba listing in September.
So far this year, Hong Kong has raised $27.1 billion from
listings, including a $3.7 billion IPO by Dalian Wanda Commercial
Properties Co, which was priced on Tuesday. Hong Kong, which also
ranked second last year, trailed the New York Stock Exchange's
$73.4 billion in IPOs, but was ahead of the Nasdaq Stock Market,
where companies raised $23.9 billion. Listings on the London Stock
Exchange totaled $22.6 billion.
Hong Kong Exchanges & Clearing Ltd.'s busy year came as
share sales in the Asia-Pacific region, from IPOs to block trades,
reached four-year highs, even as the market lost out on the $25
billion IPO of Alibaba Group Holding Ltd. Issuance on the equity
capital markets, including convertible bonds, which can be
exchanged into equity, has reached about $265 billion so far this
year, up 11% from the total for all of last year. That is the
highest level since it reached a full-year total of $398 billion in
2010, according to Dealogic, a data-tracking company.
While Australia had the biggest IPO on a market in the region--a
$4.9 billion listing by Australian health insurer Medibank Private
Ltd. last month--deals by Chinese companies in Hong Kong just kept
coming in the last few months of 2014. Apart from the IPO by Dalian
Wanda, a real-estate business controlled by Chinese billionaire
Wang Jianlin, Hong Kong saw listings by CGN Power Co., China's
largest nuclear-power firm, which raised $3.2 billion from its IPO,
as well as a $1.4 billion listing by BAIC Motor Corp., a car
maker.
"Next year, we can expect to see a number of big deals in Hong
Kong from Chinese financial institutions such as brokerages,
insurers and asset management firms," said Jonathan Penkin, co-head
of the financing group for the Asian-Pacific region, excluding
Japan, at Goldman Sachs Group Inc.
An IPO being conducted by Shengjing Bank Co., in northeast
China, is the first such Hong Kong deal by a Chinese bank since
March, when Harbin Bank Co. raised $1.1 billion. Shengjing is
looking to raise up to $1.4 billion and will price its deal later
this week.
Other Chinese banks that could list next year are Bank of
Beijing Co., and Bank of Shanghai, which is partly owned by HSBC
Holdings PLC. Brokerages Huatai Securities Co. and GF Securities
Co. are also each likely to launch $1 billion IPOs next year.
Taikang Life Insurance Co. may raise up to $2 billion and China
Huarong Asset Management Co., a company set up to handle banks' bad
debts, could raise around $3 billion.
Worries about China's economic slowdown will limit interest
among investors, but companies that have an edge will still find
fans, bankers say.
"Investors like stories that benefit from China's policy
directions such as the healthcare and new energy sectors," said
Mille Cheng, co-head of equity capital markets in Asia Pacific at
Morgan Stanley. "Also, e-commerce or internet companies with new
business models generating high growth will continue to capture
investors' attention."
CGN Power, the first nuclear-power firm to list globally since
1996, is an example of a niche play that has caught investors'
attention. Its shares are up 25% since it listed on Dec. 10.
IPOs weren't the only booming business for bankers this year.
Sales in areas from block trades to convertible-bond issuance
chalked up gains, especially as China's stock market became one of
the world's best performers this year. The Shanghai Composite Index
is up almost 43% this year, and the biggest block trade in the
Asian-Pacific region was a sale of $7.4 billion of shares by LCD
panel maker BOE Technology Group in Shenzhen in April.
The largest convertible bond was a $1.6 billion issue by
Zhejiang Zheneng Electric Power Co., in Shanghai in October. Still,
China's biggest IPO--a $657 million listing by Shaanxi Coal
Industry Co.--was relatively small.
Hong Kong also saw a lot of big share sales, including a $6.9
billion share placement by Citic Pacific, a Chinese state-owned
company, to finance an acquisition of its parent's assets. Citic
Pacific has renamed itself Citic Ltd. since the deal was
completed.
In a second major Hong Kong deal, Ping An Insurance (Group) Co.
of China raised $4.7 billion via a private placement, where shares
are sold to a limited number of buyers. The block trade by Citic
Pacific was the region's second-biggest placement, ranking behind
BOE Technology's deal, and followed by Ping An's transaction.
Australia also saw a flood of share sales. Equity-capital market
sales volume, counting both share sales and IPOs, rose 35% to $36.4
billion this year, according to Dealogic, benefiting from a rally
that took the stock market to a six-year high. The gains began to
unravel in September--Australia's S&P/ASX 200 index is down
almost 9% since then, but IPOs have flourished this year. Medibank
is up more than 6% since listing in November.
Healthscope Ltd., an operator of hospitals, raised $2.1 billion
in a July IPO. The stock is 23% above the listing price.
IPO activity has been slower in India, even though the BSE
Sensex index has risen 29% this year, buoyed by the election, in
May, of a government seen as pro-business. Bankers say that next
year, India could see some deals as the government sells stakes in
companies such as Coal India Ltd. Private-equity firms are also
looking to exit from investments, potentially via IPOs.
Shefali Anand contributed to this article.
Write to Prudence Ho at prudence.ho@wsj.com
Access Investor Kit for GF Securities Co., Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CNE0000008L2
Access Investor Kit for Ping An Insurance (Group) Co. of China
Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CNE000001R84
Access Investor Kit for Ping An Insurance (Group) Co. of China
Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CNE1000003X6
Access Investor Kit for HSBC Holdings Plc
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=GB0005405286
Access Investor Kit for London Stock Exchange Group Plc
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=GB00B0SWJX34
Access Investor Kit for CITIC Pacific Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=HK0267001375
Access Investor Kit for Hong Kong Exchanges & Clearing
Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=HK0388045442
Access Investor Kit for CITIC Pacific Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US17304K1025
Access Investor Kit for The Goldman Sachs Group, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US38141G1040
Access Investor Kit for HSBC Holdings Plc
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US4042804066
Access Investor Kit for Morgan Stanley
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US6174464486
Access Investor Kit for The NASDAQ OMX Group, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US6311031081
Subscribe to WSJ: http://online.wsj.com?mod=djnwires