Total proceeds of TMT sector IPOs triple

Total proceeds of Chinese companies in the technology, media and telecommunications sectors that completed initial public offerings in the past year tripled to 225.9 billion yuan (US$33.2 billion) thanks to soaring overseas listings. 

“Chinese IPO cases in the TMT sector in Hong Kong and US markets will see a slowdown in 2019, with global economic slowdown and uncertainties over US-China trade negotiations,” said PwC China TMT partner Frank Lin. 

Those in the semiconductor, artificial intelligence, cloud computing, 5G network and Industry 4.0 segments will continue to lure investors’ attention in 2019. 

In the second half of 2018, the number of Chinese TMT IPOs rose significantly to 40, with combined proceeds amounting to 168.1 billion yuan with China Tower Corp, Xiaomi Corp and Meituan Dianping being the three biggest listings in terms of proceeds. 

Among those listings, 31 were completed in Hong Kong or overseas, with their proceeds accounting for 94 percent of the total amount raised.  

Two Chinese TMT companies were listed on the SEM in Shenzhen, four on the Main Board, and three on the GEM in Shenzhen.

Companies in the software and service sectors accounted for 65 percent of the number of TMT companies that listed during that period. 

The announcement made by President Xi Jinping in November last year of the proposed establishment of a sci-tech innovation board and pilot registration system at the Shanghai Stock Exchange has also drawn heated discussion. 

”The setup of the science and technology innovation board in 2019 will create a new financing platform for Chinese sci-tech innovation firms. The sci-tech innovation board will also become the ‘testing field’ for innovation in the Chinese capital market, and will be an important role model for capital market reforms,” commented Fanny Yang, PwC China Assurance partner. 

PwC said it has also advised regulatory authorities to provide a clear view of how to define income and research and development expenses for startup companies in emerging industries as well as information disclosure issues. 

“With the launch of a raft of policies such as the pilot registration system, market-oriented approaches, loosened requirements on profitability and inclusive corporate governance, more opportunities will be created for sci-tech innovation companies to list in the domestic market,” she added.