Hong Kong’s market for initial public offerings (IPOs) is heading for its worst year since 2012 as a combined US$20 billion of megadeals are being pushed to next year.
State-owned China Tower Corp (中國鐵塔) was scheduled to be one of this year’s biggest deals, with a fundraising goal of as much as US$10 billion, according to people with knowledge of the matter.
The wireless infrastructure owner, which was initially pushing to list at the end of this year, is now targeting the first quarter of next year, said the people, who asked not to be identified because the information is private.
Preparations including asset valuation and regulatory approvals have been going more slowly than initially expected, one of the people said.
The need to get sign-offs from the three phone carriers that jointly own China Tower also means that decisionmaking takes more time, the person added.
Waiting until next year could mean the firms risk missing out on the optimism driving a rally in Hong Kong’s benchmark index, which hit a decade high this month.
The China Tower delay follows similar hiccups at fellow state-owned enterprise China Petroleum & Chemical Corp (中國石油化工), which is working to spin off its retail business through a US$10 billion IPO in the territory.
“It’ll be very difficult for the Hong Kong IPO market to return to its heyday,” UOB Kay Hian (Hong Kong) Ltd (大華繼顯控股) executive director Steven Leung (梁偉源) said. “The big Chinese companies that are viable for listing are already listed.”
Hong Kong has hosted US$11.1 billion of first-time share sales this year, down from US$19.5 billion in the same period last year, data compiled by Bloomberg showed.
This is to be worst year for new offerings in the territory since 2012, unless US$11 billion in deals are completed over the next two-and-a-half months, the data showed.
While financial firms such as banks and brokerages still dominate fundraising, the proportion of the biggest deals coming from other industries such as health and education is rising.
Half of the top 10 IPOs in Hong Kong this year hailed from outside the traditional finance industry, compared with just one last year, Bloomberg data showed.
“The Hong Kong market has been transforming,” Edward Au, coleader of Deloitte China’s national public offering group, said by telephone on Monday. “Hopefully it will attract both mega-size deals in traditional industries, as well as new economy offerings.”
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