More China IPOs Led by VC, PE, Hillhouse Capital

Chinese institutional players dominated the IPO game in the first half.

Author: Belinda Zhou   

The majority of Chinese companies newly listed in the first half of this year were supported by venture capital or private equity institutions, a data firm CVSource reported.

The ratio of VC or PE-backed IPO jumped to 65%, compared with 54% in the full year 2019, according to CVSource's investment statistics.

It's reported that 122 Chinese companies with VC or PE backgrounds successfully launched IPOs in the A-shares market, Hong Kong, and the U.S. out of a total of 188 IPOs in the first half-year. 

These institutional investors also enjoyed two prolific quarters this year, seeing their total return on book reach 228.1 billion yuan ($32.6 billion) upon exit. To compare, the funding size through IPO totaled 235.5 billion yuan($33.6 billion) in the first six months through June.

Hong Kong and Beijing-based Hillhouse Capital Group listed eight companies, and Shenzhen-based Fortune Capital followed with seven firms. Tiger Fund, Qiming Venture Partners, and CDH Investments have five newly listed companies in the portfolio.

15-year-old Hillhouse Capital was first supported by the Yale Endowment, with its asset under management(AUM) over $50 billion as of October 2018. Hillhouse Capital is also the investor of  Chinese Internet giant Tencent Holdings Ltd. (HKEX: 00700; OTC TCEHY) and online retail titan JD.com, Inc. (Nasdaq: JD; HKEX: 09618).

Chinese investors Fortune Capital said its AUM hit $42.9 billion. Other investors CDH Investments claimed it has an AUM of over $17 billion, while Qiming reported an AUM of $5.3 billion.

CVSource report also said these Chinese IPO deals mainly concentrated in two months of January and June. From March to June, the approval process for Chinese companies' listing in Hong Kong has gradually accelerated, Chinese media reported.

From the perspective of sectors, internet, healthcare, and manufacturing companies are still large gold-absorbers, covering over half of the total fundraising, or 53%, in various industries.

Individually, the top ten IPO projects focus on in A-shares and Hong Kong stock markets with more than 3 billion yuan($429 million) funding size each.

Beijing-Shanghai High-Speed Railway Co., Ltd. is the largest Chinese IPO, raising $44 billion in Shanghai. The Beijing-based company, founded in 2007, engages in the construction and operation of high-speed trains for passengers in Beijing, Tianjin, Hebei, Shandong, Anhui, Jiangsu, and Shanghai.

The railroads giant was followed by JD.com with $3.9 billion and the gaming giant NetEase, Inc. (Nasdaq: NTES; HKEX: 09999) with $2.7 billion in Hong Kong.

The Shanghai Composite closed at 3,361 points, down 1.56% on Wednesday while the Shenzhen Composite declined 1.87% to 13,734 points. The Hang Seng Index stayed unchanged at 25,482 points.


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