2010-07-14 09:18

A woman outside Agricultural Bank of China Ltd's Shanghai branch. Agricultural Bank of China Ltd has raised $19.2 billion in the world's biggest IPO in four years. [China Daily]

Mainland firms raise $32.1b from domestic, overseas floats in H1

BEIJING: China will continue to lead the global initial public offering (IPO) market in terms of the funds raised and the number of deals, international accounting firm Ernst & Young said in a report on Tuesday.

Mainland companies dominated the global IPO market by raising $188 billion in 495 deals on the top four bourses - New York Stock Exchange, Nasdaq Stock Market, London Stock Exchange and Hong Kong Stock Exchange - in the past decade, the report said.

"China will maintain its lead in the IPO market as more mainland companies tap overseas capital pools even as they expand their business locally," said Terence Ho, strategic growth markets and China IPO leader at Ernst & Young.

Hong Kong remains the main choice for mainland companies as a listing destination, while American bourses are the choice for small and high-growth information technology companies, Ho said.

The domestic capital markets are also becoming more attractive with more Chinese companies looking to raise funds at home than abroad. Many red-chip companies, which have businesses in the mainland but are listed overseas, are also expected to return to the home market after Shanghai launches the international board.

During the first half of this year, 175 mainland companies raised $32.1 billion from domestic and overseas floats, exceeding the $28 billion raised during the same period last year, the report said.

The Shanghai Stock Exchange is growing fast with its market capitalization rising tenfold in the past decade to $2,196 billion as of May 2010.

The latest report from Ernst & Young also found that BRIC (Brazil, Russia, India and China) countries accounted for nearly 68 percent of the total $248 billion of funds raised in the past decade from the top four bourses. Russia was ranked the second in the global IPO market with funds of $39.1 billion raised from 39 overseas IPOs in the past decade.

"While a majority of the Russian companies chose to list on the London Stock Exchange, many are also considering floats in Hong Kong and also expressed interest in Shanghai's international board," Ho said.

Global IPO activity in the second quarter has shown signs of a strong rebound driven primarily by the emerging markets, who will continue to lead the global capital market recovery, said Gregory Ericksen, Ernst & Young's global vice-chairman for strategic growth markets.