VC/PE-backed Enterprises Prefer to Debut on Domestic Markets
BEIJING, July 23 /Xinhua-PRNewswire/ -- The Zero2IPO Research Center -- the research arm of Zero2IPO Group -- recently released the “China Enterprises IPO Q2 2008” report. According to the report, SMEs dominated in IPO (though they are generally with smaller offer amount). This quarter’s overseas listings experienced a record low amongst the second quarter of the past three years. VC/PE funds preferred to exit their investment through domestic IPO.
Fifty Chinese companies achieved IPO status during Q2 2008, raising a total of US$7.03B on two domestic markets and eleven overseas markets. On the year on year basis, the IPO events reached a three year high, while the offer amount marked a three year low. The average offer amount was only US$140.65M. Compared to Q2 2007 figures, the IPO events increased 11.1%, whereas the offer amount and average amount decreased by 65.7% and 69.1% respectively. Q2 2008 saw fourteen companies successfully list overseas, raising a total of US$1.95B. However, the overseas offer amount and number of IPO events decreased by 83.1% and 39.1% year-over-year respectively. The domestic market outstripped their overseas counterparts by attracting 36 enterprises with US$5.08B raised. The offer amount dropped 43.4% while the number of IPO events increased by 63.6% year-over-year, respectively.
VC/PE funds backed thirteen of the fifty debuts. They raised US$1.17B, a record low amongst the previous three second quarters and this figure accounted for 16.6% of the total. Specifically, the three VC/PE-backed overseas IPOs raised US$407.70M, while ten VC/PE-backed domestic IPOs raised US$759.33M. VC/PE-backed Chinese IPO events decreased by two while the amount of capital raised decreased by 69.3% compared with those during the same quarter one year ago.
Table 1: IPO Events and Offer Amount by Market
Market Offer Amt. IPO Events Average
(US$M) (US$M)
Domestic 5,081.32 36 141.15
Overseas 1,951.33 14
139.38
Total 7,032.65 50
140.65
Source: Zero2IPO Research Center
Figure 1: Year-on-Year Comparison of IPO Events and Offer Amt.
(Please Click the Link in the bottom of the release)
Sluggish Overseas IPO Events and Offer Amount
Over the course of the first half of 2008, international capital markets were bearish. In this investment environment, China-based overseas IPOs were sluggish, with both IPO events and offer amount experiencing a record low amongst the previous three second quarters. The offer amount was just about the lowest out of all previous quarters in the last three years. This quarter only fourteen Chinese enterprises debuted on overseas markets, raising a mere US$1.95B. The number of IPO events decreased by nine compared to Q2’07 and by seven in comparison to Q2’06. The offer amount dropped by 83.1% in relation to Q2’07 and by 84.5% in comparison to Q2’06.
Figure 2: Year-on-Year Overseas IPO Events and Offer Amount
(Please Click the Link in the bottom of the release)
The fourteen overseas IPOs were listed on HKMB (8), SGX (5), and NASDAQ (1). Notably, mainland China-based listings remained prominent on the HKMB and SGX exchanges. In terms of industry distribution, the Zero2IPO Research Center found that most overseas listings were spread amongst the Traditional sector. Other listings were distributed amongst the Services and Broad IT sectors.
Table 2: Overseas IPO Events and Offer Amt. by Market
Market Offer Amt. Percent IPO Percent Average
(US$M) Events (US$M)
HKMB 1,742.86 89.3% 8 57.1% 217.86
SGX 199.71 10.2% 5 35.7% 39.94
NASDAQ 8.75 0.4% 1 7.1% 8.75
Total 1,951.33 100.0% 14 100.0% 139.38
Source: Zero2IPO Research Center
Table 3: Overseas IPO Events and Offer Amt. by Industry
Sector Offer Amt. Percent IPO Percent Average
(Grade 1) (US$M) Events (US$M)
Traditional 1,477.46 75.7% 10 71.4% 147.75
Services 451.70 23.1% 3 21.4% 150.57
Broad IT 22.17 1.1% 1 7.1% 22.17
Total 1,951.33 100.0% 14 100.0% 139.38
Source: Zero2IPO Research Center
Domestic Markets Far Outperform Overseas Markets; Average Offer Amount Drops
Domestic markets greatly outperformed overseas markets both in respect to number of IPO events and total offer amount. This quarter thirty-six domestic listings raised US$5.08B. The number of domestic IPO events increased by fourteen versus Q2’07. However, during this quarter domestic IPOs were relatively smaller in size. This caused the average offer amount to settle at a mere US$141.15M (nearly a three year low), which is a stark decrease from US$267.00M during Q2’07.
Table 4: Domestic IPO Events and Offer Amt. by Market
Market Offer Amt. IPO Events Average (US$M)
(US$M)
Shanghai Stock 2,754.62 2 1,377.31
Exchange
Shenzhen SME 2,326.71 34 68.43
Board
Total 5,081.32 36 141.15
Source: Zero2IPO Research Center
In terms of industry distribution, the Zero2IPO Research Center found that the domestic listings were spread amongst a variety of industries. These industries included Traditional, Broad IT, Services and Bio/healthcare sectors. Traditional sector continued to hold the dominant position.
Table 5: Domestic IPO Events and Offer Amt. by Industry
Sector Offer Amt. Percent IPO Percent Average
(Grade 1) (US$M) Events (US$M)
Traditional 4,517.26 88.9% 27 75.0% 167.31
Broad IT 320.37 6.3% 6 16.7% 53.40
Services 133.06 2.6% 1 2.8% 133.06
Bio/healthcare 110.62 2.2% 2 5.6% 55.31
Total 5,081.32 100.0% 36 100.0% 141.15
Source: Zero2IPO Research Center
VC/PE Funds Prefer to Exit through Domestic IPO
This quarter saw thirteen VC/PE-backed debuts raise US$1.17B in total. The number of IPO events decreased by two and the offer amount decreased by 69.3% in comparison to the same period last year. Domestic markets far outstripped their overseas counterparts both in terms of IPO events and in terms of offer amount. Specifically, ten domestic VC/PE-backed IPOs raised US$759.33M, accounting for 76.9% of the total IPO events and 65.1% of the total offer amount. Three VC/PE-backed overseas listings raised only US$407.70M, representing 23.1% of the total IPO events and 34.9% of the total offer amount.
Table 6: VC/PE-backed IPO Events and Offer Amt.
Market Offer Amt. IPO Events Average
(US$M) (US$M)
Overseas 759.33 10 75.93
Domestic 407.70 3 135.90
Total 1,167.04 13 89.77
Source: Zero2IPO Research Center
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http://www.zero2ipo.com.hk/china_this_week/detail.asp?id=7031
About the Zero2IPO Research Center
Founded in November 2001, the Zero2IPO Research Center provides a full range of business research reports and customized research solutions for investment professionals in the Greater China Region. Our research ranges from Venture Capital, Private Equity, IPO, M&A to TMT industries. The Zero2IPO Research Center sets itself apart from competitors as the most prestigious research institute in the China’s VC and PE spheres.
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For any quotations, please note it is quoted from “China Enterprises IPO Report Q2 2008” and send two copies of your newspaper to:
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