Chinese mainland boasts highest average IPO proceeds annually in H1 since 2008

EY sees first CDR listing or companies returning to the A-share market via CDRs likely to debut in near future.

The Chinese mainland saw the highest average initial public offering proceeds year on year in the first half of this year since 2008, EY said in a report today.

From January to June, the average IPO proceeds in the A-share market totaled nearly 1.5 billion yuan (US$230 million) to notch the highest for the same period since 2008, the report showed.

The technology, media and telecommunications sector topped by IPO proceeds while the industrial sector led by deal number in the first six months. More artificial intelligence and new energy automotive technology companies have also launched IPOs on the A-share market since March, the report said.

New economy businesses will continue to boost IPO activities in both the mainland and Hong Kong in the second half of 2018, the report predicted.

Small and medium-scale enterprises which raised under 1 billion yuan in their IPOs fell by 79 percent by volume and shed 71 percent by proceeds compared with the prior year.

Meanwhile, IPOs from large enterprises with proceeds above 5 billion yuan accounted for 35 percent of the total proceeds. Giant enterprises and unicorn companies boosted funds raised by the top 10 IPOs to 58.3 billion yuan, up 156 percent from a year earlier.

"During the first half of 2018, policies and measures were released to facilitate listings of new-economy-related enterprises and unicorn enterprises," Tang Zhehui, partner of EY Assurance Services.

These companies were channeled into a pilot scheme which "offers explicit support to high-tech and new strategic industries including Internet, big data and cloud computing enterprises," Tang said.

The report also said that the A-share market is set to see the first Chinese depositary receipt listing in the second half year.

"We believes that the first CDR listing or companies returning to the A-share market through CDR are expected to debut in the near future, and more unicorns will list on the A-share market," said Yuan Yongmin, EY Assurance Partner.

More stringent and accelerated approvals have cut the IPO backlog has been relieved to 307 companies this month from 519 at the end of 2017.

EY estimates there will be 63 IPOs during the first half of 2018, representing only 25.6 percent of the number in the same period last year. The IPOs raised 93.1 billion yuan, down 26 percent from a year earlier. 

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