The second half of 2017 had been good to Chinese technology companies as they topped the number of Initial Public Offerings (IPO) worldwide. After a slow performance in the first half of last year, Chinese companies like Sogou, Qudian, ZhongAn, and China Literature made their mark in the global tech community in terms of IPO ranking. Starting from July until December 2017, twenty-three companies operating on mainland China opened their IPOs locally and internationally, with a total amount of $4.65 billion raised in the markets, according to the PwC China report. The country’s latest economy, also called the digital economy, amounted to a total of 26 trillion yuan ($4.27 trillion) in the same year, accounting approximately 32% of its gross domestic product (GDP).
Stock analysts attributed the influx of IPOs of Chinese technology companies to the vibrant internet-based industries. The increasing innovations triggered by latest internet technology and a rapidly growing group of tech-savvy and young clientele are considered the contributing factors for such results. From transportation network vehicle service (TNVS) to online financing, innovative tech startups are developing into giants and targeting for large investment and financing.
According to Walter Zhang, PwC China’s assurance partner, “More Chinese firms in the technology, media, and telecom sectors turned to overseas markets after being blocked by legal and technical barriers in the A-share market, especially those yet to make profits.”
In the next 12 to 24 months, a significant number of Chinese tech unicorns are eyeing to go public in Hong Kong. This event could likely boost liquidity in the capital market, as per Nicolas Aguzin – JPMorgan’s chief executive for Asia-Pacific.
Aguzin also told South China Morning Post, “2018 will be a blockbuster year for Chinese unicorns to come to the capital market. Investors here [in Hong Kong] have strong appetite for these high-growth, new economy companies.”
A huge wave of Chinese tech IPOs in the coming 12 to 24 months will likely create a new record for Hong Kong, stated by John Hall – co-head of JP Morgan’s regional global investment banking in Asia Pacific.
In general, before a company goes public, rumors about its possibility to launch are religiously followed by reporters and analysts. The following are some of the most awaited Chinese technology companies to launch their IPOs in 2018.
Ant Financial is still one of the most highly anticipated listing companies from China due to its high value and the fact that it’s Alibaba Group’s unlisted asset. In April 2016, the company’s $4.5 billion series B financing was received with more than $60 billion valuation. Founded in December 2014, Ant Financial has been rumored to be included in the IPO list for several years now. It is also reported that the company is considering to be listed in New York and Hong Kong, two of the top listing destinations for Chinese tech companies.
Another most anticipated Chinese technology company is Tencet Music, a music streaming and downloading service arm of Tencent. It is expected to be the newest addition to the latest steps of Tencent to list its affiliation. Even before it was acquired, Tencet-affiliated CMC (China Music Corp.) had expressed their plan of listing independently last 2016. According to sources with information on the matter, the IPO would have ranged from $300 up to $600 million then. Currently, the IPO size of Tenet Music is projected to be more than approximately $1 billion at a valuation of $10 billion as per Bloomberg’s prediction. Tencet-powered WeDoctor Group, an online healthcare service provider, also plans for an IPO listing. This mobile healthcare platform offers a variety of medical services, including but not limited to medical advice, online diagnosis, hospital rating, and doctors.
Another one of China’s giant tech company that is geared up for an IPO is Lufax, one of the nation’s user-to-user lenders and online wealth managers. The company with $18.5 billion valuation in its recent fundraising round in January 2016 is estimated to raise $3 billion up to $5 billion in the IPO listing in as early as the half of this year. It is also notable that since last year, the bankers have been closely monitoring the company’s initial offering. However, due to the lack of clear-cut regulations on online wealth services, Lufax has held its IPO.
