PwC links IPO boom to new system

With ... favorable policies to assist IPOs and further implementation of the registration system, the IPO market in China will continue to be active in the second half. We expect the number of A-share IPOs to reach 430490 and the volume of fundraising to hit a record high of more than 500 billion yuan this year.”

Thomas Leung,

PwC China markets managing partner

The number of first-half A-share IPOs — 245, up 108 percent yearon-year — as well as the funds raised from them — 210.9 billion yuan ($32.5 billion), up 51 percent year-on-year — bear testimony to the effectiveness of the country’s pilot registration-based system, a PwC report released on Friday stated.

Shanghai’s Nasdaq-style STAR Market saw 86 IPOs and Shenzhen’s startup board ChiNext witnessed 85 floats in the first half.

A-share IPOs via the registration system accounted for 70 percent of the total. In terms of funds raised, the corresponding figure was 59 percent, the report said.

“The STAR Market and the ChiNext board became new forces for listing,” said Thomas Leung, PwC China markets managing partner, who said he expects that A-share listings will remain active.

“With the promotion of the 14th Five-Year Plan (2021-25), favorable policies to assist IPOs and further implementation of the registration system, the IPO market in China will continue to be active in the second half. We expect the number of A-share IPOs to reach 430-490 and the volume of fundraising to hit a record high of more than 500 billion yuan this year,” Leung said.

According to an analysis by the National Public Offering Group of Deloitte China on June 18, most of the expected new listings would come from the STAR Market and ChiNext this year.

The STAR Market is forecast to see about 180-210 IPOs, raising about 130-170 billion yuan, while 180-210 companies could go public on ChiNext, netting 110-140 billion yuan, according to Deloitte China.

The ongoing improvement and implementation of the registration based IPO system, along with the introduction of new delisting rules, will help build an A-share ecosystem where the strongest will thrive, thus improving the quality of listed companies, said Jean Sun, PwC China firmwide corporate services partner.

Data also showed a growing number of investors are favoring companies related to the environmental, social and governance (ESG) theme.

In the A-share market, the number of ESG-related IPOs in the first half increased to 21, or 9 percent of the total, whereas in all of last year, ESG-related IPOs numbered only 25, or 6 percent of the total, according to the PwC report.

“In the next 30 years, China needs to add 138 trillion yuan of green investment to achieve carbon neutrality. ESG-related enterprises will become an investment hot spot,” Sun said.