Hong Kong’s IPO market hits a snag

Written by Kapronasia || June 14 2021

Perhaps there was nowhere for Hong Kong’s IPO market to go but down. From January-March, fundraising hit an all-time high of US$13.9 billion while Hong Kong Exchanges and Clearing (HKEX) posted a record profit of HK$3.8 billion (US$490 million), up 70% year-on-year. At that point, China’s fintech crackdown, which has widened to target tech giants in general, had yet to impact market sentiment.

How is Paytm’s IPO shaping up?

Written by Kapronasia || June 07 2021

Paytm is the latest SoftBank-backed unicorn to head for the exit ramp. India’s most valuable startup is planning an IPO in the subcontinent later this year that will value the company at US$25 billion to US$30 billion and raise up to US$3 billion, according to Bloomberg. If the deal is successful, it may be the largest in India’s history.

U.S.-China financial decoupling is an odd thing. Instead of a linear progression in which Chinese firms gradually eschew going public in the US and delist from its stock exchanges, we see some Chinese companies continuing to seek exits on the Nasdaq or NYSE, while others are seeking secondary listings in Hong Kong as a hedge against forced delisting. Still others are actually being forced to delist like the telecoms giant China Mobile, which is now looking at a new listing on the Shanghai Stock Exchange.

Why is HKEX riding high?

Written by Kapronasia || May 11 2021

China’s fintech crackdown is hurting some of the country’s largest tech firms, but has yet to dampen investor appetite for Chinese tech listings in Hong Kong. In fact, Hong Kong Exchanges and Clearing (HKEX) posted a record profit of HK$3.8 billion (US$490 million) in the January-March period, up 70% year-on-year. Driving the boom were listings by Chinese tech firms of various stripes, including video-streaming platform Kuaishou (which raised US$5 billion) as well as secondary listings by search giant Baidu and video-sharing platform Bilibili. The first quarter is normally the slowest for Hong Kong IPOs as it coincides with the Lunar New Year holiday. 

A Grab secondary listing would be a boon for the SGX

Written by Kapronasia || May 05 2021

Ride-hailing giant Grab is full of surprises these days. It was not so long ago that the Singaporean decacorn was said to be considering a tie-up with its rival Gojek. Gojek instead is moving to merge with e-commerce giant Tokopedia while Grab is taking the SPAC merger road to an exit. The forthcoming Nasdaq SPAC could value Grab at up to US$40 billion, but it is not the only listing the company is considering. Indeed, Grab is also considering a secondary listing on the Singapore Exchange (SGX).

Ant Group’s woes are mounting

Written by Kapronasia || April 29 2021

It has not been the best six months for Ant Group. The erstwhile high-flying fintech giant landed squarely in regulatory crosshairs on the eve of its abortive IPO and has been there ever since. Initial optimism that the company could expeditiously get its regulatory house in order have been dashed as Beijing’s demands increase. Not only must Ant vastly increase its capitalization, which will eat deep into its profit margins, the company must also restructure and hand over its precious user data to a state-run firm. Ant's valuation could fall as low as US$29 billion, a far cry from the US$315 billion price tag that the company had around the time of its abortive IPO. These changes will have a profound impact on Ant’s future prospects and likely other major fintechs in its ecosystem as well. 

Why is Afterpay considering a US IPO?

Written by Kapronasia || April 28 2021

Buy now, pay later may be the greatest thing for payments since well, credit cards, or even better, depending whom you ask. “What we’re seeing now is a once-in-a-lifetime generational shift away from traditional credit products,” Afterpay CEO and co-founder Anthony Eisen recently told The Australian. While the concept of zero-interest installment payments is not exactly revolutionary, Afterpay is one of the fintechs that has figured out how to package it right. As a result, Afterpay is not only one of the biggest BNPL firms in Australia but also the US. In March, Afterpay surpassed AU$1 billion in monthly sales in the US. With the US increasingly driving Afterpay’s growth, the company is considering an IPO on the Nasdaq. 

Gojek + Tokopedia = GoTo?

Written by Kapronasia || April 22 2021

After years of raising funds in private markets, Southeast Asia’s largest platform companies are suddenly eager to exit. The region’s foremost super app rivals are leading the pack, but the exit routes vary considerably. Grab is making SPAC history with the largest ever such deal, on the Nasdaq. Not to be outdone, Gojek and Tokopedia are moving to finalize their expected merger, which will likely include a listing both in New York and on Indonesia’s own stock exchange. The combined entity, the aptly named “GoTo,” could attain a valuation of US$30-$40 billion. 

Here comes the Grab SPAC

Written by Kapronasia || April 19 2021

Grab is heading for the exit ramp SPAC style. IPOs are slow, costly and let regulators hold a magnifying glass to a firm’s balance sheet. Less so with this SPAC on the Nasdaq, which will give Grab a high valuation (US$40 billion) and investors a way to cash out. Grab has been operating for about nine years. The merger will include roughly US$4.5 billion in cash, the largest share sale yet by a Southeast Asian firm in the U.S.

Fintech crackdown slows Shanghai STAR board's momentum

Written by Kapronasia || April 12 2021

Before Ant Group’s IPO was nixed, the Shanghai STAR board was red hot. Since then, it has cooled off considerably. Not only is Ant’s IPO in limbo, but other Chinese tech companies are scuttling their plans to go public, one after the next. Ant is the bellwether for the market, whether it is a bull or bear. Data compiled by Financial Times show that 76 firms suspended their IPO applications in March, more than twice the number in February. Overall, 168 companies have put their plans to go public on ice since November. 

Hong Kong IPO market continues hot streak in Q1

Written by Kapronasia || April 06 2021

Hong Kong's IPO market picked up in the first quarter right where left off in 2020, soaring to a new high in terms of overall proceeds, according to KPMG. Deals raised on the Hong Kong Stock Exchange totaled US$13.9 billion. The nixed Ant Group deal last October has sidelined most fintech listings but not the rest of what KPMG describes as "innovation companies," notably biotechs.

Digital investment platforms grow in Indonesia

Written by Kapronasia || April 01 2021

Heading into 2021, Indonesia's prospects for fintech investment were looking pretty good. Among Asia's key emerging markets, Indonesia checks all the right boxes. It is huge, relatively open to foreign investment, has a fast-growing economy (hindered by the pandemic for now, but certain to rebound sharply) and has a large unbanked population. With most Indonesians new to retail investing, fintechs see a strong opportunity to get in on the ground floor. Since January, several Indonesian online investing startups have closed successful funding rounds.

Unpacking the possible Grab SPAC

Written by Kapronasia || March 25 2021

After umpteen funding rounds and nearly nine years in operation, Grab is finally heading for the exit ramp. The question is, will the Singaporean decacorn choose to go public the usual way or do something different? Until the past few weeks, a standard IPO in New York looked like the obvious choice. But with the current SPAC (special purpose acquisition company) craze, Grab might decide to hop on the bandwagon.

U.S.-China financial tensions flare anew

Written by Kapronasia || January 11 2021

To delist or not to delist: That is the question. The New York Stock Exchange (NYSE) could not seem to make up its mind earlier this month, delisting three Chinese state-owned telecoms stocks (China Mobile, China Telecom and China Unicom Hong Kong), reversing course, and then finally deciding that the three firms should be delisted after all. The professed reason for kicking the companies off the NYSE is they have ties Chinese military and threaten America's national security. The impact on their market capitalization will likely be limited as their trading volume is much higher in Hong Kong than New York. More forced delistings of Chinese firms could occur in the waning days of the Trump administration though.

Hong Kong's IPO market has been almost unstoppable in 2020. Neither the worst pandemic in a century nor the nixing of Ant Group's long-anticipated blockbuster debut have been able to dampen market sentiment for long. To be sure, fintechs have shelved plans to list in Hong Kong, but there are many other Chinese companies unaffected by the microlending crackdown eager to go public in the former British colony. In fact, while the fintech unit of JD.com will likely delay its listing indefinitely, JD's health unit is set to raise US$3.5 billion.

JD Digits' IPO may have to wait

Written by Kapronasia || November 19 2020

The suspension of Ant Group's blockbuster IPO has cast a shadow over China's fintech industry as online microlenders scurry to figure out how to meet tough new capitalization requirements. JD Digits, the fintech unit of e-commerce giant JD.com, is one of the firms most affected by the nixed Ant IPO. JD Digits filed in September to list on the Shanghai STAR board, a deal that was expected to raise up to US$3 billion.

Suspended Ant IPO creates uncertainty for Chinese fintechs

Written by Kapronasia || November 10 2020

With the suspension of Ant Group's IPO, Beijing is once again signaling that its patience for fintech-induced disruption has limits. In the past, Chinese regulators throttled entire fintech industry segments - cryptocurrency and P2P lending - that they deemed excessively risky to the financial system and a threat to social stability. To be sure, Ant Group plays an integral (some would say peerless) role in the Chinese financial system which makes it very different from P2P lenders and crypto firms. However, Beijing places a premium on controlling systemic financial risk. No company can expect the enthusiastic backing of regulators if it appears too gung-ho about disruption and somewhat contemptuous of the system. China officially remains a socialist market economy, lest fintechs or their investors forget.

Hong Kong IPO market benefiting at New York's expense

Written by Kapronasia || October 13 2020

Hong Kong's future as a financial center is increasingly centered on mainland China. That's a boon for the city's capital markets, among the world's best performing in a difficult year. From January to July, Hong Kong IPOs raised US$87.5 billion, up 22% year-on-year, buoyed by a flurry of Chinese tech and biotech listings. While that tally is impressive, the best is yet to come. Ant Group's dual-listing IPO in Hong Kong and Shanghai is expected to raise US$35 billion, half in each city. The IPO is likely to occur before the U.S. presidential election on November 3 to eschew possible market volatility.

Paytm bets on India's burgeoning stock market

Written by Kapronasia || September 29 2020

India's Paytm hopes to follow in the footsteps of its key backer Ant Group and build a super app centered on financial services. In a market as large, diverse and fragmented as India's, it is unlikely any app could become a dominant as Alipay and WeChat are in China. However, "super" need not mean the app for everything, maybe just for most of one's digital banking needs. That's why Paytm is steadily adding new services. The latest one is stock trading, a fast-growing business in India.

Why is Lufax planning a U.S. IPO?

Written by Kapronasia || August 18 2020

Amid clouds of a U.S.-China financial war, Hong Kong is fast becoming the default for Chinese fintech IPOs. The former British colony offers liquid capital markets both close to both home and global investors. But there are exceptions. Lufax, one of China's largest online wealth management platforms, is reportedly instead eyeing a New York IPO that could raise up to US$3 billion. If Lufax moves fast, it can list in the U.S. before new rules go into effect that may prevent Chinese firms non-compliant with American accounting standards from listing on U.S. exchanges.

Shanghai's STAR board shakes up China's capital markets

Written by Kapronasia || August 04 2020

Shanghai's STAR board is introducing a more market-driven approach to China's initial public offerings. Listing on the STAR market is more streamlined than the traditional process in China, where new listings are subject to an informal price cap of 23 times earnings and a 44% ceiling for first-day gains. Before the Shanghai STAR Board was launched it July 2019, it could take many years before companies' plans to go public were approved. Now a flurry of tech listings on the Shanghai STAR market are shaking up China's capital markets.

2 listings are better than 1 for Ant IPO

Written by Kapronasia || July 27 2020

For the IPO of China's fintech giant Ant Group, two listings are better than one. Instead of going public only on the Hong Kong Stock Exchange or the Shanghai STAR Market, Ant plans to list on both. Ant has not disclosed the size of its coming IPO, but the firm is reportedly valued at US$200 billion, up from US$150 billion during its 2018 fundraising. Ant reportedly plans to sell 10% of its shares through the twin listing, which could come this year or in 2021. An uncertain market outlook will inevitably weigh on timing.

The Hong Kong IPO market's hot streak shows no sign of slowing down, despite political turmoil and the pandemic-induced downturn. The reason is simple: Whatever changes come in Hong Kong, Chinese firms are prepared for them. After all, the firms listing on the HKEX are all based on the mainland. At the same time, China's economy is gradually recovering. Business activity is picking up.

Investors appear to have adjusted to a new normal in Hong Kong, one characterized by political unrest and economic uncertainty. As the coronavirus ebbs, protests are returning to Asia's preeminent financial hub. The former British colony remains mired in a steep recession. And yet, large Chinese tech firms are pushing ahead with initial public offerings and secondary share listings on the Hong Kong Stock Exchange. At the current rate, Hong Kong could be the world's hottest IPO market in 2020.

London may attract more IPOs from China

Written by Kapronasia || June 01 2020

As tensions between the U.S. and China flare up in the financial sector, the future of Chinese fundraising in America's capital markets looks uncertain. Hong Kong has benefited, attracting a growing number of Chinese tech IPOs and secondary share listings from juggernauts like Alibaba and JD.com. Another possible winner in the U.S.-China financial tussle could be London, which began operating the London-Shanghai Stock Connect scheme in 2019.

Why is Hong Kong's IPO market so resilient?

Written by Kapronasia || May 20 2020

The past year has been one of the hardest in memory for Hong Kong, which has been in recession since the fourth quarter of 2019. While the city has contained the coronavirus relatively well, it still faces political turmoil with no end in sight. You wouldn't know that from the state of its IPO market though, which had the most new listings among all stock exchanges in the first quarter and is gathering momentum faster in the second quarter than any other major index.

The Hong Kong IPO market has picked up considerably since early May. Suzhou-based biotech firm Peijia Medical listed on the HKEX on May 15, raising HK$2.3 billion (US$302 million) that it will use to develop its product pipeline of heart valve and vascular repair devices. Peijia Medical's shares jumped 74% in its first day of trading, the best debut performance this year so far for an IPO over US$50 million.

Hong Kong's future as a financial center is increasingly clear: It will be a global fundraising hub for Chinese firms, especially in the technology sector. These days, the biggest Hong Kong IPOs are almost all Chinese tech firms, whether the listings are primary or secondary. Non-Chinese tech firms are more likely to go public in New York or London. Following Alibaba's mammoth secondary share listing on the Hong Kong Stock Exchange in November 2019 - which raised US$13 billion - its arch-rival JD.com is reportedly planning a $US3 billion share sale in Hong Kong this year. Alibaba's primary listing is on the NYSE while JD.com is listed on the Nasdaq.

What went wrong at China's Starbucks rival Luckin?

Written by Kapronasia || April 13 2020

In early April, China's Starbucks rival Luckin Coffee was revealed to be a paper tiger. The company that was supposedly giving the U.S. coffee giant a run for its money in the world's largest consumer market had literally fabricated its success. To be sure, Luckin's 4,500 China stores - exceeding Starbucks' 4292 - were no mirage. But the company's sales figures were bogus. On April 2, Luckin publicized the results of an internal investigation showing RMB2.2 billion (US $311 million) in fraudulent sales from the second to the fourth quarter of 2019.

Virus slows momentum of Hong Kong IPO market

Written by Kapronasia || April 07 2020

Hong Kong's IPO market was expected to be one of the world's best performing this year, attracting Chinese firms eager to raise capital internationally. Whereas such firms may have preferred listing on the NYSE or Nasdaq in years past, tensions in the U.S.-China relationship have caused many of them to reconsider.

Then the novel coronavirus broke out, sapping the steady momentum that had been building in Hong Kong's capital markets since Alibaba's mammoth secondary share listing in November 2019. Artificial intelligence startup SenseTime is the latest major Chinese tech firm to put off a planned Hong Kong IPO this year. SenseTime will instead seek up to US$1 billion in private funding.

Ant Financial IPO said to be back on track

Written by Kapronasia || January 28 2020

Chinese fintech giant Ant Financial is reportedly working with banks to restart a long-stalled initial public offering. In its most recent fundraising round, held in June 2018, Ant was valued at US$150 billion. With a price tag like that, when Ant does go public, the listing will be pathbreaking for Asian companies. The company has not given a timetable for the IPO, but Credit Suisse and China International Corp. are involved in initial preparations, according to The Financial Times.

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