According to statistics recently published by Zero2IPO Research Center, a well-known VC and PE research institution in Greater China Region, with the sustained recovery in global economy and the official kick-off of the ChiNext at home, Chinese enterprises have gradually warmed up to listing in 2009. Both the number of listings and the amount raised thereby saw a strong rebound from 2008. Boosted by the first batch of 28 ChiNext-listed enterprises, Q4'09 has seen a small tide of listings by Chinese enterprises.
On the 13 overseas markets and three domestic markets closely watched by Zero2IPO Research Center, the first 11 months of 2009 has seen 133 Chinese enterprises going public on foreign and domestic capital markets, raising a combined US$40.70B or an average US$306.04M. Among them, 62 enterprises were listed on nine overseas markets, garnering a total of US$20.32B. The domestic capital market has also attracted 71 enterprises to list their shares in five months since its resumption after a long suspension, collecting a total of US$20.39B. Off the 133 Chinese enterprises listed between Jan. and Nov. 2009, 58, or 43.6% of the total, were backed by VC or PE, raising a total of US$10.36B, or 25.4% of the total. 22 of these enterprises went public on overseas markets, raising US$6.57B, and 36 on domestic markets, securing US$3.79B.
Overseas Listings and Financing Amount Kept Increasing; Market and Industry Highlights Diversification
Between Jan. and Nov. 2009, Chinese enterprises have become increasingly active in getting listed overseas. World economy has contained the momentum of contraction and picked up gradually, while overseas markets kept improving and new stock issuance proceeded in order. Under such a context, Chinese enterprises have become increasingly active in getting listed overseas and the upward trend has become ever more obvious. Altogether, 62 Chinese enterprises got listed on nine overseas markets, raising a combined US$20.32B. Compared with the same time in 2008, the number of listings increased by 25, while the financing amount was up by 1.94 times.
By market, the destinations of overseas-listed Chinese enterprises between Jan. and Nov. were diversified. There were 62 Chinese enterprises listed on nine overseas markets including HKMB, NASDAQ and NYSE. Compared with 2008, five new listing destinations were included: FWB, KOSDAQ, KSM, CATALIST and HKGEM. To be specific, HKMB attracted 40, or 64.5%, of these enterprises to list their shares, the most among all overseas markets, and a total of US$18.24B was raised, accounting for 89.8% of the amount raised overseas. The large-cap shares seeking overseas financing also chose to go public on HKMB. As a result, the top nine offerings were invariably launched on HKMB. NASDAQ also attracted seven Chinese enterprises, which garnered US$1.44B, accounting for 11.3% of the overseas listings and 7.1% of the amount raised. NYSE and SGX respectively had four and five listings by Chinese enterprises, collecting US$326.76M and 147.15M. The other overseas markets reported relatively fewer listings and smaller financing amount.
In industry breakdown, Traditional carried on the previous trend, outstripping other industries in both number of listings and financing amount. between Jan. and Nov. 2009, a total of 46 Traditional enterprises went public overseas, raising a total of US$13.14B, accounting for 74.2% of the total listings and 64.7% of the amount raised. Year-on-year, the number of listings increased by 21, while the financing amount rose 120.3%. Broad IT and Clean-tech both reported significant increase in the number of listings and financing amount from a year earlier. Bio/Healthcare had only one enterprise going public on HKMB, which was on a par with the same period last year, though the financing amount increased 111 folds. The number of Services listings was down by three, but the financing amount was up by 5.9 times.
Domestic IPO Market Reopened; ChiNext Kick-off Leads to A-share Listing Upsurge
In the first 11 months of 2009, domestic economy showed signs of stabilizing and recovery. The A-share market underwent tremendous changes such as the completion of IPO system reform, resumption of domestic IPO market late in Q2'09 and the grand inauguration of the ChiNext after decade-long preparation. IPO on the main board and SME board was resumed after a 10-month-long suspension, and many enterprises are in the pipeline for listing, resulting in an upsurge in the number of listings and financing amount. Also driven by the first batch of ChiNext-listed enterprises, domestic enterprises embraced a small wave of listings. Between Jan. and Nov. 2009, a total of 71 enterprises debuted on three domestic markets, collecting a combined US$20.39B or an average US$287.13M. Due to the listings of large-cap shares such as China State Construction Engineering Corporation (CSCEC) and Metallurgical Corporation. of China Ltd., (MCC), the total financing amount rose by 36.8% from the same period of 2008 though the number of listings was down by five. Recently, a number of enterprises applying to be listed on SME Board or ChiNext have passed examination and opened subscriptions for their IPOs, underscoring the rising enthusiasm of domestic enterprises in getting listed.
In the first 11 months of 2009, domestically-listed enterprises were mainly concentrated on SME Board and ChiNext, respectively attracting 37 and 28 listings. But the two markets recorded a relatively small financing amount. The 65 enterprises listed on both markets raised only 31.3% of the total amount raised on domestic market, while the six enterprises listed on Shanghai Stock Exchange garnered US$13.997B, accounting for 68.7% of the domestic total.
In terms of industry breakdown, Traditional industry sat on the top in both financing amount and number of listings. 35 Traditional enterprises raised US$13.69B, accounting for 49.3% and 67.2% of the total respectively. Services, with only nine listings, ranked second in total financing amount, and came up first with an average of US$482.32M. Broad IT, Bio/Healthcare and Clean-tech recorded smaller financing amount.
IPO-backed Exits Increasing Active; ChiNext Likely to Be Major Exit Channel for VC/PE
With a steady recovery in overseas IPOs and the official launch of the ChiNext, the number of listed VC/PE-backed Chinese enterprises has seen an obvious increase and so had the financing amount. In the first 11 months, a total of 58 VC/PE-backed Chinese enterprises landed on domestic markets, garnering US$10.36B.
In comparison, domestic markets outperformed their overseas peers in attracting listings of VC/PE-backed Chinese enterprises. Thanks to the inauguration of the ChiNext, the number of domestically-listed VC/PE-backed enterprises increased obviously to 36, which was 14 more than that of overseas-listed ones. Of the 36 domestically-listed VC/PE-backed enterprises, 20 landed on the ChiNext and all of them were supported by VC/PE. On the other hand, due to the high P/E ratios of the first batch of ChiNext-listed enterprises, VC/PE institutions were provided with impressive investment returns. In face, more VC/PE-backed enterprises are willing to go public on the ChiNext, which is expected to become a major exit channel for VC/PE.
Note:Beginning from Q1'09, Zero2IPO Research Center has increased the number of overseas markets it focuses on from 11 to 13, including NASDAQ, NYSE, LSEMB, AIM, HKMB, HKGEM, SGX, Catalist, TSE, Mothers, KSM, KOSDAQ, FWB. LSEMB and KSEMB are the newly included.
