Ant Financial IPO (Photo : Getty Images)
Global banks are hoping to take in huge sums of money from China tech startups that are expected to make their initial public offering (IPO) in the next few years, according to an article in The Australian.
Last week, Snap Inc. made a strong IPO that buoyed U.S. markets as global listing fell 12 percent last year with capital raised at only 30 percent, based on Dealogic data.
"There's a large and deep pool and pipeline of companies from mainland China that we certainly expect to access the markets," Bob McCooey, chairman of Asia-Pacific at Nasdaq, said.
About 60 Chinese companies--more than half of them in tech--are being monitored by the U.S. market as they believe these companies, with combined total worth of $200 billion, could go public in the U.S. in the next two years, the report said.
According to a Wall Street bank, the Chinese tech companies that could go public in the next few years have a combined valuation of $400 billion. The bank said that if their valuations increased by one-quarter before they list and about 15 percent of their shares will be offered publicly, the China-tech IPOs would result in a total of $75 billion.
In global IPOs, Asia, especially China, is slowly becoming a dominant force. Last year, about 68 percent of global listings and 56 percent of the money raise came from Asian markets. Dealogic said that other markets also benefited from Chinese companies as 60 companies from the mainland went public outside the country last year.
Dealogic added that Asian companies also contributed about $2.2 billion in IPO fees to global banks last year, with 55 percent of the global fees, including $1.5 billion coming from Chinese companies.
Listing in the Mainland
Although it is still unsure if some IPO-hopefuls will list, there are quite a number of other private funds. Alain Lam, a senior tech banker at Credit Suisse Group in Hong Kong said that most private Chinese tech start-ups "have aspirations to be public companies, but the question is when".
Another issue is that some companies may decide to list in the mainland where valuations are often higher and their IPOs will be handled by Chinese banks and brokers.
The report said that Zhong An Online P&C Insurance Co, the country's first online-only insurance company, originally planned a $2 billion listing in Hong Kong this year, but later decided to go public in mainland China.
Because listing applications have jammed Chinese exchanges, some tech companies choose to go public in markets such as Nasdaq. Tech stocks on U.S. markets jumped recently, giving IPO candidates better expectations.
Alibaba's Ant Financial IPO is highly expected this year as it could raise about $25 billion but the biggest listing could be Lufax - Shanghai Lujiazui International Financial Asset Exchange Co -which could raise about $5 billion in Hong Kong in the second half of 2017, the report said.
Toutiao, a news aggregator firm, which is valued at about $10 billion, has also started talking to banks about an IPO in the U.S., sources said. Other companies hoping to make an IPO include Meituan-Dianping, China's leading online seller of movie tickets and restaurant bookings, and ride-hailing company Didi Chuxing Technology.