Global investment banks are racing to redirect Chinese groups’ initial public offerings towards Hong Kong after new cyber security rules instituted by Beijing halted lucrative tech listings previously heading for New York, reported the Financial Times.
About 20 Chinese companies had publicly disclosed plans to raise $1.4 billion from share sales in New York this year, Dealogic data showed. But that was before regulators in Beijing launched an investigation into Didi Chuxing, just days after the Chinese ride-hailing group’s $4.4 billion New York flotation. News of the probe sent Didi shares down 20% from its IPO pricing.
Advising Chinese companies on IPOs has been a lucrative business for banks including Goldman Sachs and Morgan Stanley, generating fee revenue of $460 million in the first half of the year.
“We’re speaking to everyone about it. All the Chinese issuers planning New York IPOs are looking at whether they can pivot to Hong Kong,” said a senior capital markets banker in Hong Kong. “If you want to do a deal this year, at best you’ll be delayed until 2022 and at worst you won’t be able to do it.”