Chinese language autonomous driving firm WeRide listed on the Nasdaq on Friday, Oct. 25, 2024.
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BEIJING — Chinese language IPOs within the U.S. and Hong Kong are set to extend subsequent yr, analysts stated, as some high-profile listings outdoors the mainland this yr elevate investor optimism over worthwhile exits.
Chinese language autonomous driving firm WeRide listed on the Nasdaq Friday with shares rising almost 6.8%. Earlier this month, Chinese language robotaxi operator Pony.ai additionally filed paperwork to record on the Nasdaq. Each corporations have lengthy aimed to go public.
Few giant China-based corporations have listed in New York for the reason that Didi IPO in the summertime of 2021 elevated scrutiny by U.S. and Chinese language regulators on such listings. The Chinese language ride-hailing firm was pressured to quickly droop new consumer registrations, and obtained delisted in lower than a yr.
U.S. and Chinese language authorities have since clarified the method for a China-based firm to go public in New York. However geopolitics and market adjustments have considerably diminished U.S. IPOs of Chinese language companies.
“After a few sluggish years, we usually count on the IPO market to revive in 2025, bolstered by rate of interest decreases and (to some extent) the conclusion of the U.S. presidential election,” Marcia Ellis, Hong Kong-based world co-chair of personal fairness apply, Morrison Foerster, stated in an e mail.
“Whereas there’s a market notion of regulatory points between the U.S. and China as being problematic, lots of the points driving this notion have been solved,” she stated.
“Chinese language corporations have gotten more and more considering getting listed in Hong Kong or New York, as a result of problem in getting listed in Mainland China and strain from shareholders to shortly obtain an exit.”
This yr, as many as 42 corporations have gone public on the Hong Kong Inventory Trade, and there have been 96 IPO purposes pending itemizing or below processing as of Sept. 30, in line with the trade’s web site.
Final week, Horizon Robotics — a Chinese language synthetic intelligence and auto chip developer — and state-owned bottled water firm CR Beverage went public in Hong Kong.
The 2 had been the trade’s largest IPOs of the yr, excluding listings of corporations that additionally commerce within the mainland, in line with Renaissance Capital, which tracks world IPOs. The agency famous that Chinese language supply big SF Categorical is planning for a Hong Kong IPO subsequent month, whereas Chinese language automaker Chery goals for one subsequent yr.
Nonetheless, the general tempo of Hong Kong IPOs this yr is barely slower than anticipated, George Chan, world IPO chief at EY, informed CNBC in an interview earlier this month.
He stated the fourth quarter is usually not an excellent interval for listings and expects most corporations to attend till at the very least February. In his conversations with early stage traders, “they’re very optimistic about subsequent yr” and are getting ready corporations for IPOs, Chan stated.
The deliberate listings are usually life sciences, tech or shopper corporations, he stated.
Hong Kong, then New York
Investor sentiment on Chinese language shares has improved over the previous couple of weeks due to high-level stimulus bulletins. Decrease rates of interest additionally make shares extra enticing than bonds. The Dangle Seng Index has surged over 20% thus far this yr after 4 straight years of declines.
Many Chinese language corporations that record in Hong Kong additionally see it as a technique to check traders’ urge for food for an IPO in a foreign country, stated Reuben Lai, vp, personal capital, Higher China at Preqin.
“Geopolitical tensions make Hong Kong a most well-liked market,” Ellis stated, “however the depth and breadth of US capital markets nonetheless make many corporations significantly think about New York, particularly for these that concentrate on superior expertise and usually are not but worthwhile, who generally consider that their fairness tales can be higher acquired by U.S. traders.”
Simply over half of IPOs on U.S. exchanges since 2023 have come from foreign-based corporations, a 20-year excessive, in line with EY.
Geely-backed Chinese language electrical automotive firm Zeekr and Chinese language-owned Amer Sports activities each listed within the U.S. earlier this yr, in line with EY’s record of main cross-border IPOs.
Chinese language electrical truck producer Windrose stated it intends to record within the U.S. within the first half of 2025, with a twin itemizing in Europe later that yr. The corporate, which goals to ship 10,000 vehicles by 2027, on Sunday introduced it moved its world headquarters to Belgium.
A restoration in Chinese language IPOs within the U.S. and Hong Kong will help funds money out on their early stage investments in startups. The dearth of IPOs had diminished the inducement for funds to again startups.
Now, traders are taking a look at China once more, after just lately deploying capital to India and the Center East, Preqin’s Lai stated. “I am positively seeing a larger potential from now in China whether or not it is cash coming again, valuation of the businesses, exit atmosphere [or] efficiency of the funds.”
Whereas the pickup in investor exercise is much from ranges seen within the final two years, the nascent restoration consists of some investments in shopper merchandise corresponding to milk tea and supermarkets, Lai stated.
