Greater China IPO Watch 2017

Transcription

1 Greater China IPO Watch surveys stock market listings in Greater China and provides a comparison with the world s major markets Greater China IPO Watch 217

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3 This Greater China IPO Watch provides an overview of the initial public offerings (IPOs) and listing activities on Greater China s principal stock markets, including Hong Kong, Shanghai, Shenzhen and Taiwan. The analysis covers companies which were listed on these markets from 1 January to 31 December 217. For comparability purposes, all figures in this report have been translated into United States Dollars (USD) at the applicable closing exchange rate at the end of each year. Initial public offering in this publication is defined to include all share listings on a platform where the entity s shares have not been listed previously. This report has been prepared by the mainland China/Hong Kong Capital Market Services practice of PwC. Introduction to the four stock markets The Hong Kong stock market consists of two separate boards: the Main Board (MB) and the GEM. The MB facilitates fund raising by companies with track records of certain minimum profit, revenue, operating cash flow and/or market capitalisation levels as set out in the Hong Kong listing rules. The GEM focuses on companies which do not fulfil the profitability/track record requirements of the MB but have growth potential and a minimum level of positive operating cash flow. Companies established in mainland China (the People s Republic of China) that are listed in Hong Kong are referred to as H-share companies. Companies owned by mainland China nationals or enterprises which are listed in Hong Kong through Hong Kong or overseas incorporated holding companies are referred to as Red Chip companies. Both the Shanghai and Shenzhen Stock Exchanges consist of A-share and B-share listing platforms on which companies established in mainland China can list. The Shenzhen Stock Exchange has a Small and Medium Enterprise (SME) Board and a ChiNext Board to facilitate fund-raising of small and medium-sized enterprises and growing venture enterprises. Shanghai and Shenzhen A-share, and shares listed on SME and ChiNext can only be traded by mainland China nationals and enterprises, while B-share can only be traded by overseas investors. National Equities Exchange and Quotation system in mainland China, which serves as a national share transfer system for SMEs to transfer shares and raise funds, is not covered within this review. The Taiwan Stock Exchange (TSEC) facilitates capital raising by companies (both Taiwan and foreign companies) with track records of certain minimum profit and capital base. Technologybased companies without track records but with a certain minimum amount of paid-in capital and projected net worth can also be listed. Most of the companies in Taiwan have to list their shares for a minimum of six months on the over-thecounter market, Emerging Stock on the Gretai Securities Market (GTSM) before listing on TSEC. This review does not include data from the GTSM. Greater China IPO Watch 217 1

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5 Contents 4 Foreword 5 Overview of the IPO markets in Greater China 6 IPOs by stock exchange 7 IPO vs. other equity fund raising 8 IPOs by P/E multiples 9 IPOs by share price performance on the first day of listing 11 IPOs by industry sector 12 Turnover value and market capitalisation 13 Top ten IPOs in Greater China from 213 to Top ten IPOs in world history and top ten IPOs worldwide in Comparison with the US markets 16 Comparison with the European markets 17 Comparison with major Asian markets 18 Listed debt issued in mainland China and Hong Kong

6 Foreword Affected by geopolitical and economic uncertainties in 216, the global IPO market slowed in early 217 reflecting reduced levels of investor confidence in the capital markets. Market sentiment improved as 217 progressed, economic growth continued and volatility remained at low levels creating favourable IPO market conditions. Momentum slowed in the mainland China IPO market in the second half of the year due to changes in the regulatory review process. Overall IPO activity across the region increased by 67% compared to 216 with a 1% increase in funds raised. There was a reduction in larger IPOs (>USD 1 billion) across the region, with the top ten IPOs contributing only 21% of the region s total IPO proceeds compared to 42% in 216. This was primarily driven by a reduction in the number of IPOs from the financial services sector in 217. Shanghai led the region in terms of the amount of funds raised, whereas Shenzhen produced the highest number of IPOs. IPO activity remained strong in Hong Kong with IPO volumes increasing by 38% from 216 attracting 3% of the region s funds raised with many enterprises still viewing it as their first choice of fundraising platform in Asia and even worldwide. The long-term fundamentals in the region remain positive with GDP growth and urbanisation forecast to continue, the region s capital markets are expected to strengthen in 218, following a period of regulatory reform and a continued pro-growth strategy by the leadership in China creating a supportive environment for IPOs. A number of new economy issuers completed listings in 217 and recent rule changes to allow listings of new economy enterprises will play an important part in strengthening Hong Kong s role as a regional financing platform. In addition, dual-class share structures will help the Hong Kong market to attract new issuers and enhance market diversification. The proposed plans to allow trading of H-shares held by founders or major shareholders could further bolster fund raising activities by mainland enterprises in Hong Kong. In the mainland, regulators are developing a mechanism to allow large Chinese companies listed on overseas exchanges to issue depositary receipts in China which should provide an attractive capital raising alternative to a number of listed issuers. Investor demand for new issuers from Greater China is anticipated to continue as the long term fundamentals in the region remain relatively attractive compared to other major markets with GDP growth and urbanisation forecast to continue. However, the global investment backdrop remains uncertain with further interest rate rises inevitable in the medium term and geopolitical concerns remaining. This emphases the need for companies to be confident in their chosen strategy and for listing applicants to be IPO ready in order to take advantage of the continued short IPO windows. Kennedy Liu Partner, Head of Capital Markets and Accounting Advisory Services PwC mainland China and Hong Kong 4 Greater China IPO Watch 217

7 Overview of the IPO markets in Greater China The number of IPOs in Greater China increased significantly from 378 in 216 to 631 in 217. The amount of funds raised from IPOs increased by 1% from USD 47.3 billion in 216 to USD 52.1 billion in 217. The Greater China Exchanges continued to lead the world in terms of the number of IPOs and funds raised. Number of IPOs from 213 to Number of IPOs Year Amount of IPO funds raised from 213 to USD billion Year Greater China IPO Watch 217 5

8 IPOs by stock exchange In aggregate, deal volumes increased by 67% across the Greater China markets, with increases in deal volumes of over 75% in Shanghai and Shenzhen. IPO volumes doubled in Shanghai compared to 216 accompanied by a 44% increase in funds raised reflecting a reduction in the size of the average funds raised per IPO. Shenzhen showed a 79% increase in IPO volumes from 124 in 216 to 222 in 217 with a 13% increase in funds raised. The increase was primarily driven by growth of 81% in the number of IPOs on the ChiNext Board for SMEs which had a particularly strong year in 217. The Hong Kong Main Board hosted 94 IPOs compared to 81 in 216, with a 36% decrease in IPO funds raised, falling to USD 15.7 billion. Hong Kong s GEM had another strong year in terms of IPO volumes, attracting 8 new listing applicants in 217 compared to 45 in 216. IPO funds raised increased marginally to USD.7 billion. The Taiwan Stock Exchange hosted 21 IPOs raising USD.3 billion, compared to 25 in 216 which raised USD.4 billion. Funds raised in USD billion Hong Kong Main Board Hong Kong GEM Shanghai A Shenzhen SME Board Shenzhen ChiNext Taiwan Total 213 No. of IPOs 89* # % of total 61.8% 16.%.%.%.% 22.2% 1.% Funds raised % of total 96.% 1.8%.%.%.% 2.2% 1.% 214 No. of IPOs 13 # % of total 38.4% 7.1% 16.1% 11.6% 19.% 7.8% 1.% Funds raised % of total 68.4%.7% 12.7% 8.3% 8.3% 1.6% 1.% 215 No. of IPOs 14 # % of total 27.3% 8.9% 23.4% 11.5% 22.6% 6.3% 1.% Funds raised % of total 57.%.5% 28.4% 4.8% 8.3% 1.% 1.% 216 No. of IPOs 81 # % of total 21.4% 11.9% 27.3% 12.2% 2.6% 6.6% 1.% Funds raised % of total 52.% 1.3% 31.1% 7.% 7.8%.8% 1.% 217 No. of IPOs 94 # % of total 14.9% 12.7% 33.9% 12.8% 22.4% 3.3% 1.% Funds raised % of total 3.1% 1.3% 4.7% 11.9% 15.4%.6% 1.% * included Real Estate Investment Trusts (REITs): 2 in 213 # included listing by introduction & switch from GEM to Main Board without raising funds in Hong Kong: 13 in 213, 13 in 214, 17 In 215, 9 in 216 and 14 in Greater China IPO Watch 217

9 IPO vs. other equity fund raising The relative proportion of funds raised from IPOs in Greater China versus total equity funds raised increased slightly from 14% in 216 to 16% in 217. This was primarily due to decreases in other equity funds raised in Shenzhen, which decreased by over 25% from USD 146 billion in 216 to USD 16 billion in 217, and in Shanghai, which decreased by 6% from USD 11.4 billion in 216 to USD 95.3 billion in 217, offset by a 55% increase in Hong Kong, which increased from USD 37.5 billion in 216 to USD 58 billion. Total equity funds raised from 213 to 217 Other equity funds raised (USD billion) IPO funds raised (USD billion) USD billion Year Hong Kong Shanghai Shenzhen Taiwan Greater China total Amount in USD billion Amount % Amount % Amount % Amount % Amount % 213 IPO funds raised %. %. %.5 13% % Other equity funds raised % % % % % Total equity funds raised % % % 3.9 1% % 214 IPO funds raised 3. 25% 5.5 9% 7.2 1%.7 21% % Other equity funds raised % % % % % Total equity funds raised % % % 3.3 1% % 215 IPO funds raised % % 7.7 7%.6 14% % Other equity funds raised % % % % % Total equity funds raised % % % 4.2 1% % 216 IPO funds raised % % 7. 5%.4 12% % Other equity funds raised % % % 3. 88% % Total equity funds raised % % % 3.4 1% 335 1% 217 IPO funds raised % % %.3 4% % Other equity funds raised 58 78% % % % % Total equity funds raised % % % 6.8 1% % Greater China IPO Watch 217 7

10 IPOs by P/E multiples In 217, P/E multiples in Greater China for IPOs increased compared to levels shown in 216. The percentage of IPOs offered at a P/E multiple of over 2 times was 81% in 217 compared to 63% in 216. P/E ratio 5 Number of IPOs < > N/A P/E multiples in Shanghai increased from 72% of IPOs offered at P/E multiples of above 2 in 216 to 93% in 217. P/E multiples in Shenzhen increased from those shown in 216, with approximately 95% being offered at multiples above 2 reflecting the high growth nature of the listing companies. P/E multiples in Hong Kong also increased, with 48% of IPOs offered at P/E multiples of above 2 compared to 36% in 216. In Taiwan, P/E multiples increased compared to those seen in 216 with around a quarter of IPOs with a P/E greater than 2 times. P/E ratio by Stock Exchange 215 Number of IPOs < > P/E ratio by Stock Exchange 216 Number of IPOs < > N/A 5 N/A P/E ratio by Stock Exchange 217 Number of IPOs < > N/A 5 Hong Kong Shanghai Shenzhen Taiwan 8 Greater China IPO Watch 217

11 IPOs by share price performance on the first day of listing Around 94% of new listings in 217 closed their first day of trading with a price above the IPO issue price indicating continued favourable pricing for IPO investors. In 217, 5% of IPOs enabled investors to have a first day gain of more than 5% compared to 12% in 216, including 18% of IPOs in Hong Kong. Share price performance by year - % change of first day closing price over IPO price Number of IPOs Greater China IPO Watch 217 9

12 Share price performance - % change of first day closing price over IPO price by Stock Exchange Number of IPOs % to % % to -.1% to % -9.99% 32 % to 9.99% % to 19.99% % to 49.99% 4 3 5% to 99.99% 6 1% to % 1 2% to % % to % 6% to 1% to % % 2 2% to 3% 17 4 Share price performance - % change of first day closing price over IPO price by Stock Exchange Number of IPOs % to % % to -.1% to % -9.99% % to 9.99% % to 19.99% % to 49.99% 9 3 5% to 99.99% 6 1% to % 2 2% to % % to % 6% to 1% to % % 1 2% to 3% 9 4 Share price performance - % change of first day closing price over IPO price by Stock Exchange Number of IPOs % to % % to -.1% to % -9.99% 55 4 % to 9.99% % to 19.99% 21 2% to 49.99% % to 99.99% 8 1% to % % to % 3% to % 6% to 1% to % % 2% to 3% 14 3 Hong Kong Shanghai Shenzhen Taiwan 1 Greater China IPO Watch 217

13 IPOs by industry sector Most of the IPO candidates in Greater China are from the retail, consumer goods and services sector, which represented 45%, 37% and 4% of the total number of IPOs in 215, 216 and 217 respectively. There was also an increase in the relative proportion of applicants from the industrial sector, from 37% in 216 to 41% in 217. The relative increases in the number of IPO applicants from the retail, consumer goods and services sector and the industrial sector was offset by a reduction in the number of applicants from the financial sector from 9% in 216 to 5% in 217. The relative increase in the number of IPO applicants from the retail, consumer goods and services sector was matched by an increase in the relative proportion of funds raised from 28% in 216 to 4% in 217. Similarly, the increase in the relative proportion of applicants from the industrial sector was matched with a corresponding increase in the relative proportion of funds raised from 16% in 216 to 28% in 217. The relative proportion of IPO funds raised from the financial sector decreased significantly from 48% in 216 to 21% in 217. This was due to the Postal Savings Bank of China Co Ltd IPO in 216 which individually raised USD 7.6 billion. Number of IPOs by industry sector 5% 7% 4% 9% 4% 5% 45% 215 8% 37% % 4% 217 1% Total number of IPOs: 381 Total number of IPOs: 378 Total number of IPOs: % 37% 41% Funds raised by industry sector 6% 2% 4% 28% 28% 21% 215 Total IPO funds raised: USD 58.8 billion 43% 216 Total IPO funds raised: USD 47.3 billion 48% 4% 217 Total IPO funds raised: USD 52.1 billion 7% 19% 16% 4% 6% 28% Energy & utilities Financials Information technology & telecommunications Industrials Retail, consumer goods & services Greater China IPO Watch

14 Turnover value and market capitalisation The market capitalisation of the Greater China capital markets increased by 25% from 216 levels with a 1% net increase in the number of listed companies. The turnover value of the Greater China capital markets remained at 216 levels, retreating from the record levels seen in 215. This was primarily driven by an increases of 31% in Hong Kong and 9% in Shanghai offset by a 15% decrease in Shenzhen. Turnover in the Greater China capital markets for 217 was 148% of its closing market capitalisation in 217 (216: 184%); while it was 52% (216: 65%) in the United Kingdom and 81% (216: 14%) in the United States Stock Exchange Number of listed companies Turnover value Market capitalisation Number of listed companies Turnover value Market capitalisation Number of listed companies Turnover value Market capitalisation Hong Kong Main Board Hong Kong GEM 1,644 3, , ,713 2,99.6 3, ,794 2, , Shanghai A 1,73 2, ,531 1,175 7, ,83.5 1,389 7, ,75.7 Shanghai B Shenzhen A* 1,735 18,861 3, ,859 11, ,2.1 2,78 9, ,69.8 Shenzhen B Taiwan ,73.6 Total 5,649 43, ,12.6 5,999 2, , ,592 2, ,136.8 * include Shenzhen SME Board and Shenzhen ChiNext Market data as of 31 Dec (Amount in USD billion) 12 Greater China IPO Watch 217

15 Top ten IPOs in Greater China from 213 to 217 The top ten IPOs in Greater China accounted for 21% of the total funds from IPOs in 217 (216: 42%). Over the last five years, Hong Kong and Shanghai have consistently hosted the largest IPOs in Greater China. The ability of these two markets to absorb large IPOs demonstrates the significant capital pool available in Greater China. In 217, five IPOs each raised over USD 1 billion, compared to 1 in 216 and 12 in 215. Average deal sizes of the top ten IPOs decreased from USD 2 billion in 216 to USD 1.1 billion in 217. Hong Kong again led the way for larger IPOs, notably in the financial sector. 215 Company Funds raised (USD million) Stock Exchange HTSC 5, Hong Kong Guotai Junan Securities Co Ltd 4,633 Shanghai GF Securities Co Ltd 4,139 Hong Kong China Huarong Asset Management Co Ltd 2,541 Hong Kong China Reinsurance (Group) Corporation 2,115 Hong Kong China National Nuclear Power Co Ltd 2,33 Shanghai Legend Holdings Corporation 1,975 Hong Kong China Energy Engineering Corporation Ltd 1,9 Hong Kong Orient Securities Co Ltd 1,546 Shanghai China Railway Signal & Communication Corporation Ltd 1,455 Hong Kong Total 27,337 (46%) 213 Company Funds raised (USD million) Stock Exchange China Everbright Bank Co Ltd 3,25 Hong Kong China Cinda Asset Management Co Ltd 2,824 Hong Kong SINOPEC Engineering (Group) Co Ltd 1,798 Hong Kong China Huishan Dairy Holdings Co Ltd 1,5 Hong Kong Huishang Bank Corporation Ltd 1,368 Hong Kong China Galaxy Securities Co Ltd 1,98 Hong Kong Qinhuangdao Port Co Ltd 562 Hong Kong Bank of Chongqing Co Ltd 559 Hong Kong Langham Hospitality Investments and Langham Hospitality Investments Ltd 549 Hong Kong China Conch Venture Holdings Ltd 533 Hong Kong Total 13,996 (63%) 216 Company Funds raised (USD million) Stock Exchange Postal Savings Bank of China Co Ltd 7,629 Hong Kong China Resources Pharmaceutical Group Ltd 1,942 Hong Kong China Zheshang Bank Co Ltd 1,938 Hong Kong Bank of Shanghai Co Ltd 1,537 Shanghai China Merchants Securities Co Ltd 1,379 Hong Kong Everbright Securities Co Ltd 1,151 Hong Kong BOC Aviation Ltd 1,128 Hong Kong DFZQ 1,8 Hong Kong CSC Financial Co Ltd 1,57 Hong Kong Bank of Jiangsu Co Ltd 1,42 Shanghai Total 19,883 (42%) 214 Company Funds raised (USD million) Stock Exchange Dalian Wanda Commercial Properties Co Ltd 4,39 Hong Kong 217 Company Guotai Junan Securities Co Ltd Funds raised (USD million) Stock Exchange 2,27 Hong Kong CGN Power Co Ltd 3,638 Hong Kong HK Electric Investments Ltd 3,111 Hong Kong WH Group Ltd 2,36 Hong Kong BAIC Motor Corporation Ltd 1,532 Hong Kong Shengjing Bank Co Ltd 1,52 Hong Kong China CNR Corporation Ltd 1,293 Hong Kong Harbin Bank Co Ltd 1,131 Hong Kong Guosen Securities Co Ltd 1,127 Shenzhen SME Luye Pharma Group Ltd 878 Hong Kong Total 2,611 (48%) Zhongan Online P & C Insurance Co Ltd 1,75 Hong Kong China Literature Ltd 1,225 Hong Kong Zhongyuan Bank Co Ltd 1,19 Hong Kong Guangzhou Rural Commercial Bank Co Ltd 1,188 Hong Kong Yixin Group Ltd 866 Hong Kong China Galaxy Securities Co Ltd 628 Shanghai Caitong Securities Co Ltd 628 Shanghai Razer Inc 67 Hong Kong Huaneng Lancang River Hydropower Inc 6 Shanghai Total 1,889 (21%) Greater China IPO Watch

16 Top ten IPOs in world history The top four IPOs in world history are based in mainland China/Hong Kong. Greater China stock exchanges account for three out of the top ten IPOs in world history. In 214, Alibaba Group, the Chinabased e-commerce business, completed an IPO on the New York Stock Exchange raising USD 25 billion, the largest IPO recorded, surpassing the IPO of Agricultural Bank of China Limited in 21 which raised a total of USD 22.4 billion. The IPO of Industrial and Commercial Bank of China Ltd is the third largest IPO in world history, raising USD 22 billion in 26. Rank Listing year Company Stock Exchange Country USD million Alibaba Group Holding Ltd New York Stock Exchange China 25, Agricultural Bank of China Ltd Hong Kong Stock Exchange & Shanghai Stock Exchange 3 26 Industrial and Commercial Bank of China Ltd Hong Kong Stock Exchange & Shanghai Stock Exchange China 22,43 China 22, AIA Group Ltd Hong Kong Stock Exchange China (Hong Kong) 2, VISA Inc New York Stock Exchange United States 19, NTT Mobile Communications Network Inc Tokyo Stock Exchange Japan 18, General Motors Co Ltd New York Stock Exchange United States 18, Ente Nazionale per I'Energia Elettrica Milan Stock Exchange Italy 17, Facebook Inc Nasdaq Stock Exchange United States 16, Deutsche Telekom Frankfurt Stock Exchange Germany 13,36 Source: Thomson Financial Top ten IPOs worldwide in 217 One of the top ten IPOs in the world in 217 was from Greater China, compared to four in 216. Rank Listing month Company Stock Exchange Country USD million 1 March Snap Inc New York Stock Exchange United States 3,91 2 June Allied Irish Banks PLC Irish Stock Exchange/ London Stock Exchange Ireland 3,844 3 October Pirelli & C SpA Borsa Italiana Italy 2,833 4 July Landis+Gyr Group AG SIX Swiss Exchange Switzerland 2,428 5 May Netmarble Games Corp Korea Stock Exchange South Korea 2,348 6 April Guotai Junan Securities Co Ltd Hong Kong Stock Exchange China 2,27 7 June Altice USA Inc New York Stock Exchange United States 2,152 8 October BAWAG Group AG Wiener Borse Austria 1,976 9 April Galenica Sante AG SIX Swiss Exchange Switzerland 1,891 1 February Invitation Homes Inc New York Stock Exchange United States 1,771 Source: Thomson Financial 14 Greater China IPO Watch 217

17 Comparison with the US markets The amount of IPO funds raised in the US markets (NYSE and Nasdaq) increased by 14% from USD 21.8 billion in 216 to USD 44.4 billion in 217, with a 63% increase in IPO volumes. The average deal size in the US was USD.22 billion, marginally up on the USD.18 billion seen in 216. The average deal size in Greater China was USD.8 billion in 217 which is lower than the USD.13 billion seen in 216. The value of equity trading in Greater China remained consistent with 216 levels at around USD 2,867 billion. The value of equity trading in the US decreased by 9% to USD 25,871 billion in 217 compared to USD 28,389 billion in 216. Value of equity trading (USD billion) 5, 4, 43, , 2, 1, 2,978 2,867 12,515 11,71 11,336 17,477 17,318 14,535 Greater China Nasdaq NYSE Source: The World Federation of Exchanges website (Amount in USD billion) Stock Exchange Number of IPOs Funds raised Average deal size Number of IPOs Funds raised Average deal size Number of IPOs Funds raised Average deal size Hong Kong Shanghai Shenzhen Taiwan Greater China total Nasdaq NYSE Nasdaq + NYSE total Greater China IPO Watch

18 Comparison with the European markets The IPO markets in Europe (including exchanges in the EU member countries plus Switzerland and Norway) increased 31% by volume and 1% by funds raised in USD terms. In 217, the number of European IPOs increased to 348, still below the 43 IPOs recorded in 211. Average deal size in Europe increased from USD.1 billion in 216 to USD.15 billion in 217. In 217, USD 52.1 billion of IPO funds were raised in Greater China by 631 IPOs, representing an average deal size of USD.8 billion, comparable with that seen in Europe. The value of equity trading in Europe increased by 6% from USD 1,653 billion in 216 to USD 11,29 billion in 217. Value of equity trading (in USD billion) 5, 4, 43, , 2,978 2,867 2, 1, 13,232 1,653 11,29 Greater China Europe Source: The World Federation of Exchanges website (Amount in USD billion) Stock Exchange Number of IPOs Funds raised Average deal size Number of IPOs Funds raised Average deal size Number of IPOs Funds raised Average deal size Hong Kong Shanghai Shenzhen Taiwan Greater China total London (Main Board) London (AIM, SFM, PSM ) London total Europe total Greater China IPO Watch 217

19 Comparison with major Asian markets The number of IPOs in Japan increased from 9 in 216 to 92 in 217. The IPO funds raised in Japan decreased from USD 9.8 billion in 216 to USD 6 billion in 217. The number of IPOs in Singapore (including Main Board and Catalist) decreased from 17 in 216 to 15 in 217. IPO funds raised decreased significantly from USD 1.5 billion in 216 to USD.4 billion in 217. Australia experienced a 33% increase in IPO volumes from 86 in 216 to 114 in 217 despite a 9% decrease in funds raised reflecting a resurgence in small cap and emerging company IPOs. Malaysia continued its development as a capital market with IPO numbers consistent with 216 with an increase in IPO proceeds from USD.2 billion in 216 to USD 1.7 billion in 217, primarily due to the IPO of Lotte Chemical Titan Holdings which raised USD.9 billion alone. (Amount in USD billion) Stock Exchange Number of IPOs Funds raised Average deal size Number of IPOs Funds raised Average deal size Number of IPOs Funds raised Average deal size Hong Kong Shanghai Shenzhen Taiwan Greater China total Japan Exchange Group (Tokyo and Osaka)* Sapporo Securities Exchange Nagoya Stock Exchange Fukuoka Stock Exchange Japan total^ Main Board Catalist Singapore total Malaysia Australia * include J-REIT ^ the offering value includes global offering Greater China IPO Watch

20 Listed debt issued in mainland China and Hong Kong Mainland China The mainland China debt market primarily comprises bonds listed on stock exchanges or the inter-bank market. In 217, the number of issues decreased by 21% compared to 216 with a 15% decrease in amounts raised. This reflects a rising interest rate environment and a policy focus on reducing leverage at domestic institutions. The People s Bank of China continues to promote open access to certain foreign corporates, financial institutions and sovereign entities to the interbank debt market to issue RMBdenominated bonds (so called Panda bonds) in mainland China. Hong Kong Hong Kong is a liberal debt market where international investors are free to invest in debt instruments and there are no restrictions on foreign borrowers. The bond market in Hong Kong has for some time been a significant market place for issuers and investors, in both domestic and foreign currencies. The range of product offerings, the open access for issuers and investors, both domestic and international, and the increasing significance of offshore RMB bond issuances make Hong Kong one of the most frequented international bond markets in Asia. Issuers can select whether they wish to list instruments on the Hong Kong Stock Exchange or issue privately where trading occurs outside stock exchange. Generally, larger issues tend to be completed via a listing. However, a significant number of issuers continue to issue private debt securities which are not listed on an exchange. There was a 5% increase in the volume of listed debt issues in Hong Kong in 217 with a 52% increase in funds raised reflecting average issue sizes consistent with 216. Bond issued in mainland China 8, 7, 6,845 6, 5,851 5,388 5, 4, 3, 2, 1, , ,455 1, Bond issued in Hong Kong Number Amount raised (USD billion) Source: HKEx, Thomson and Wind 18 Greater China IPO Watch 217

21 Capital Market Services practice The Capital Market Services practice is part of the Assurance practice of PwC. It is comprised of a core team of specialists who provide a broad range of services to companies and/or investment banks in connection with all aspects of capital market transactions. These include preparation for becoming a public listed company, selecting the right market and advisory team, advising on group restructuring, accounting and regulatory issues, and acting as reporting accountants. The mainland China/Hong Kong Capital Market Services practice is part of the PwC global network of capital markets specialists. Mainland China/Hong Kong Capital Market Services practice partners and directors: Kennedy Liu kennedy.liu@hk.pwc.com Edmond Chan edmond.chan@hk.pwc.com Rayon Chu +86(755) rayon.wh.chu@cn.pwc.com Jie Shen +86(21) jie.shen@cn.pwc.com Pauline Leung pauline.pw.leung@hk.pwc.com Xuemei Li +86(1) xuemei.li@cn.pwc.com Tom Liu +86(21) tom.liu@cn.pwc.com Thomas Lo thomas.lo@hk.pwc.com Eddie Wong eddie.kc.wong@hk.pwc.com Doris Tu +86(1) doris.y.tu@cn.pwc.com Rita Chan rita.chan@hk.pwc.com Geoffrey Tang geoffrey.tang@hk.pwc.com George Yuen +86(1) george.yuen@cn.pwc.com About PwC For more information, please visit: or About PwC - Globally At PwC, our purpose is to build trust in society and solve important problems. We re a network of firms in 158 countries with more than 236, people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details. PwC - Mainland China, Hong Kong, Taiwan and Macau PwC mainland China, Hong Kong, Taiwan and Macau work together on a collaborative basis, subject to local applicable laws. Collectively, we have around 75 partners and strength of around 18, people. We provide organisations with the professional service they need, wherever they may be located. Our highly qualified, experienced professionals listen to different points of view to help organisations solve their business issues and identify and maximise the opportunities they seek. Our industry specialisation allows us to help co-create solutions with our clients for their sector of interest. We are located in these cities: Beijing, Shanghai, Hong Kong, Shenyang, Dalian, Tianjin, Jinan, Qingdao, Nanjing, Suzhou, Hangzhou, Ningbo, HeFei, Zhengzhou, Wuhan, Changsha, Xi an, Chengdu, Chongqing, Xiamen, Guangzhou, Shenzhen, Macau, Taipei, Chungli, Hsinchu, Taichung, Tainan and Kaohsiung. Greater China IPO Watch

22 About Greater China IPO Watch Greater China IPO Watch surveys all new listings on Greater China s principal stock markets and market segments. All of the graphs, tables, and data used within this publication have been collated or extracted by the Capital Market Services practice research team. In collating and extracting this information, we rely upon data provided directly by various exchanges, and extracted from the World Federation of Exchanges website. We do not carry out any confirmation procedures on that information. How can PwC help? Going public is a major challenge for any company and there are many decisions that will need to be taken prior to an IPO. Management will need to steer the company through a complicated and often time-consuming process in order to be ready for an IPO. Planning and good preparation are crucial for a successful flotation. It s not simply a question of appointing advisors but about ensuring that the company is ready to be listed on the public markets and that it is able to meet the challenges that such a listing brings. If you are planning on listing, there will be many questions you will want to ask. These are just some of the questions we will be able to help you find answers to: What is an appropriate valuation for my business? What does being a public company really mean? How long will it take to complete an IPO? Do we have the right resources? Are my people ready? How to implement a stock based compensation plan? Do we have an attractive story for potential investors? What is the best way to articulate our strategy? What are the corporate governance issues we need to address? What are the internal control procedures we need to implement? How many non-affiliated/independence directors should we have on the board? What are the implications of a concurrent offering of shares to sophisticated investors in the US (via 144A) or elsewhere (via Reg S)? How do our accounting policies compare with other companies in the sector? Is my finance function ready? Are my operations run and managed effectively? What additional disclosures will we need to provide as a public company? Will it be a problem if one of our subsidiaries has a modified audit opinion? Do we need to restate our track record for recent acquisitions and disposals? How will an IPO affect our existing incentive arrangements? Any other possible listing venues?

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