Zhang Yu

JeniZhang13@163.com

INITIAL public offerings (IPOs) of Chinese technology, media and telecommunications (TMT) maintained strong momentum over the last year, with total proceeds raised from new share sales doubling year on year, according to a report released Tuesday by accounting firm PricewaterhouseCoopers (PwC).

There were 108 TMT IPOs in 2017, raising a total of 76 billion yuan (US$12 billion). Notably, the proceeds from overseas listings accounted for more than half of the total in the second half, a record high in recent years.

“Looking ahead, TMT companies, which are not yet profitable, will all be considering the possibility of listing in Hong Kong and other overseas markets because of the higher thresholds for domestic listing,” said Frank Cai, PwC China TMT partner.

Globally, for companies with a value of more than US$40 million, there were 99 tech IPOs last year, raising approximately US$25.1 billion cumulatively. The number and proceeds of global tech IPOs rebounded significantly from the recent low in 2016 and were on par with those in 2015.

China chalked up a record 23 tech IPOs in 2017 and raised US$4.65 billion, followed by the United States and Switzerland. The Internet software and service sector was again the leader in terms of proceeds, with 13 IPOs raising about US$4.8 billion.

The report also showed that the average price-to-earnings ratio of A-share TMT companies has continued on a downward trajectory in recent years, which declined to 49 at the end of 2017.

The number of Chinese TMT IPOs is expected to remain stable in 2018, said Wilson Chow, PwC global, Chinese mainland and Hong Kong leader.

“A notable future dynamic will stem from the introduction of Chinese Depository Receipt (CDR), which will lead to high-quality innovative companies that had listed abroad looking to return to the A-share market,” he said.

In addition, the revised listing rules of the Hong Kong stock market, which will be introduced this year, will provide more options for mainland TMT companies.