VC/PE funds backed ten of the thirty-one debuts. They raised US$1.06B, accounting for 9.4% of the total. Specifically, four VC/PE-backed overseas IPOs raised US$815.69M, while six VC/PE-backed domestic IPOs raised US$240.29M. VC/PE-backed Chinese IPO events decreased by four while the amount of capital raised decreased by 71.1% this quarter.
Sluggish Overseas IPO Events: Centralized Overseas Listing Venues and Sector
This quarter Chinese overseas IPOs performed flat. Only nine Chinese enterprises debuted on overseas markets, raising a total of US$3.44B. The number of IPO events decreased by five in comparison to Q1'07 and by thirteen in comparison to Q1'06. The Zero2IPO Research Center has concluded that there are two reasons for this change. First, Chinese enterprises generally tend to complete their listings during the final quarter of any given year because of uncertainty over what the next year will bring. Historical data proves the validity of this finding. Second, over the course of this quarter main overseas markets fluctuated sharply. The IPO price of multiple new shares was significantly lower than the issuing price. As a result, many Chinese enterprises were forced to suspend listing plans and save IPO resources for the second or third quarter of this year.
While the total number of listings decreased, the amount of funds raised by Chinese enterprises listing overseas reached a three year high. The number increased by 67.2% versus Q1'07 and 81.4% versus Q1'06. This can be largely attributed to the great success of HKMB-listed China Railway Construction Corporation that raised a total of US$2.34B.
The nine overseas IPOs were listed on HKMB, SGX, NYSE and NASDAQ, four popular listing venues for Chinese enterprises. Notably, mainland China-based listings were extremely prominent on the HKMB and SGX exchanges. Specifically, among the six HKMB-listed enterprises, four were from mainland China, and three out of the seven SGX listings were also mainland China-based. In terms of industry distribution, the Zero2IPO Research Center found that most overseas listings were spread amongst the Traditional sector. Six Traditional debuts or 66.7% of the total IPO events raised US$3.14B, accounting for 91.2% of the total offer.
Domestic Markets Far Outperform Overseas Markets: Traditional Enterprises Stand out
Domestic markets far outperformed overseas markets both in respect to IPO events and total offer amount. This quarter twenty-two domestic listings raised US$7.83B. Domestic IPO events exceeded overseas listings by thirteen, while the offer amount was US$4.39B more than the corresponding overseas figure. Nonetheless, during this quarter domestic IPOs were relatively smaller in size. This caused the average offer amount to decrease by US$89.07M in comparison to the same quarter the previous year. In terms of industry distribution, the Zero2IPO Research Center found that most overseas listings were heavily spread amongst the Traditional sector. Among the 22 domestic debuts, nineteen were from the Traditional sector, accounting for 86.4% of the total, while Other Hi-tech, Broad IT and Bio/healthcare each had one IPO.
Exits via IPO Perform Flat: More Domestic IPO Events and More Overseas Offer Amount Occur
This quarter saw ten VC/PE-backed debuts raise US$1.06B in total. The IPO events decreased by four and the offer amount decreased by 71.1% compared to the same period during the previous year. Although the four overseas VC/PE- backed IPOs were two less than debuts on domestic markets, overseas IPO still raised an impressive US$815.69M. Their average total value (US$203.92M) marked a four year high. The domestic offer amount was significantly less than its overseas counterpart. The six VC/PE-backed domestic listings raised a combined US$240.29M, only accounting for 3.1% of the total domestic offerings.
The key global capital markets will continue to fluctuate and readjust over the next quarter. Companies aiming to list will remain cautious before listing on any stock exchange during this period of uncertainty. The Zero2IPO Research Center forecasts that China overseas IPOs will remain sluggish well into the second quarter of 2008. Meanwhile, domestic markets may embrace an IPO tide in Q2 after experiencing a month of relatively little IPO activity.
