China expects US$41b raised from 300 IPOs

By Ye Zhen | January 3, 2014, Friday |

Print Edition

China is likely to see as many as 300 initial public offerings this year raising up to 250 billion yuan (US$41 billion) after the IPO market was frozen for 14 months, according to an industry report.

The funds expected to be raised this year will surpass the 108.3 billion yuan netted in 2012, PricewaterhouseCoopers said in a report released yesterday.

Of the new IPOs, 40 firms will raise 100 billion yuan on the Shanghai Stock Exchange while the remaining 260 firms will list on the SME and ChiNext boards in Shenzhen and expected to to raise 150 billion yuan, PwC predicted.

“Some that have considered other platforms may turn back to the A-share market, helping A-share IPOs to soar and possibly reach a record high in 2014,” said Jean Sun, PwC China Assurance Partner.

The average price-to-earning ratio of IPOs on the Shanghai market is said to be around 20 to 40. That is much higher than the average PE ratio of 11 of existing shares due to investor enthusiasm for new shares, said Edmond Chan, PwC Capital Market Service Group Partner.

The average PE ratio of IPOs on the SME board is seen at 20 to 40 while those listing on the ChiNext board is between 30 and 40, according to the report.

PwC expects most IPOs to be from the manufacturing, retail, consumer goods, and technology industries.

There are now 11 companies approved to list in the mainland since China ended a 14-month suspension of IPOs.

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