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Mainland firms making beeline to HK bourse

(China Daily)
Updated: 2009-08-14 13:26

More than 10 mainland enterprises are expected to float their businesses in an initial public offering (IPO) in Hong Kong after the economic recovery revived stock trading and boosted companies' capital raising activities.

According to Reuters, as many as 16 companies are going to seek stock listings in Hong Kong, including large mainland-based enterprises, such as Sinopharm Holdings, China Minsheng Banking Corp Ltd and China Pacific Insurance (Group) Co Ltd.

"Many of these companies had intended to go to the Hong Kong bourse, but were disturbed by the financial crisis," said Jack Chow, partner of KPMG Hong Kong. "Now they have begun to revive their listing schedules because the market outlook is not as hazy."

An IPO suspension on the mainland bourses by securities regulators, from September 2008, had led some mainland enterprises to seek listings in Hong Kong.

"The regulator lifted the nine-month IPO ban in June, but not many companies can issue new shares straight away, so some of them choose to go to the Hong Kong stock market if they are really short of funds," Chow added.

Sinopharm Holdings, the largest distributor in the Chinese pharmaceutical market, is waiting for the Hong Kong stock exchange's approval after getting permission from the government to list in the city, local media reported, citing unnamed sources. Sinopharm is going to raise up to 7 billion yuan in its IPO later this month or September.

Related readings:  Sinopharm gets HK listing  China to allow domestic listing of foreign firms  Bohai Bank eyes HK or mainland listing

Shanghai-listed Minsheng is also on its way to the H-share market. According to Reuters, it plans to list in the Hong Kong bourse in the fourth quarter and raise as much as 20 billion yuan through an IPO. Minsheng is the first national joint-stock commercial bank primarily held by private enterprises.

China Pacific, the third biggest insurer, has announced a plan to issue no more than 1 billion H shares. The company was listed in the Shanghai Stock Exchange in 2007.

There are more companies dealing with H-share listings but haven't kept the public informed, according to Chow.

Over the first half of this year, 18 companies issued new shares in Hong Kong, among which mainland-based China Zhongwang Holdings Ltd and BBMG Corporation were prominent.

Zhongwang Holdings raised $1.27 billion through an IPO, and BBMG, the biggest cement supplier in the mainland, advanced 56.27 percent on its first trading day in Hong Kong with its IPO oversubscribed by more than 770 times.

"IPO activity (in Hong Kong) will continue in the second half if there are no significant negative economic shocks," said Edmond Chan, an Assurance partner of PricewaterhouseCoopers Hong Kong. "This will create a favorable environment for large mainland enterprises to list in Hong Kong."

The drive by mainland enterprises to list shares in Hong Kong has yet to peak, observers said. "It's still not clear where the market will lead and many are now watching and waiting," said Chow.