Chinese Banks Riding on High of China’s Nasdaq-Style Tech Board

(Bloomberg) -- China’s new Star Market may be coming down from its feverish first day surge, but Chinese banks that worked on the deals are still enjoying the high.

Chinese investment banks account for seven of the top 10 banks in Asia for initial public offerings this year, the best showing since Bloomberg started compiling data in 1999. CITIC Securities and China International Capital Corp. top the list, with 9% and 7.4% of market share, data compiled by Bloomberg show. The last time Chinese banks accounted for more than half of the top 10 banks was in 2011.

Both banks worked on the Star board IPOs of China Railway Signal & Communication Corp. -- which raised $1.6 billion -- and Montage Technology Co., which raised $417.5 million. But the bank that got the biggest boost from the Star market appears to be China Securities, which worked on seven of the 25 IPO debutantes on the board and jumped seven places from a year earlier. Haitong Securities climbed the most, by eight spots, although it only worked on two Star board IPOs.

Read more: Wall Street Gets Crumbs at China’s New Tech IPO Party

Goldman Sachs Group Inc. and Morgan Stanley were the only foreign banks involved in the Star market’s debut IPOs, both working as underwriters on the China Railway Signal deal. The mainland banks have been muscling in on deals for years as they grow their market share in Asia, and the pipeline of companies looking to list on the tech board could give them that extra lift.

More than 120 companies have joined the queue to list on the tech board in Shanghai, with UBS Securities expecting them to raise over 100 billion yuan ($14.5 billion) and for the Star market to contribute 0.9% to 2.1% of the total revenue of brokers in 2019. On average, underwriters for the first 25 companies earned 7% of deal , higher than in Hong Kong where banks have earned about 2.8% for IPOs above $50 million.

Morgan Stanley is the only Western bank to feature in the top five this year, having worked on three of the biggest IPOs in Asia this year -- China Railway Signal, Hansoh Pharmaceutical Group Co. and Embassy Office Parks REIT. Last year it ranked number one, followed by CICC and Goldman Sachs.

UPCOMING LISTINGS:

• Shenzhen Chipscreen Bioscience (maker of anti-cancer drugs)
  • Shanghai Star market
  • Priced at 20.43 yuan to raise 1.02b yuan
  • Essence Securities
• Kepwealth Property Philippines (real estate developer)
  • Philippine stock exchange
  • Company is looking to price its IPO on Aug. 1 ahead of offer period set for Aug. 5-9
  • Tentative listing date is Aug. 19
  • BDO Capital & Investment
• StemRim (supplier of medical products)
  • Tokyo exchange
  • Seeking as much as $132m; pricing Aug. 1
  • SMBC Nikko Securities
• Dohome (home furnishing retailer)
  • Thailand
  • Plans to sell 456m new shares and 8.88m existing shares at 7.80 baht
  • Green shoe options of 56.2m shares
  • Subscription period July 25 to 31
  • Phatra Securities, Kasikorn Securities
• Affle India (mobile marketing platform)
  • Offering to start July 29, close July 31
  • Aims to raise 900 million rupees
  • IPO d at about 4.6 billion rupees at top end of price band
  • ICICI Securities, Nomura Financial Advisory
• Amlogic (Shanghai) Co. (maker of semiconductor products)
  • Shanghai Star market
  • $236m
  • 41.1 million shares at 38.50 yuan each
  • Taking orders July 29, expected to start trading early Aug.
  • Guotai Junan
• Shanghai Friendess Electronic Technology (maker of laser motion control systems)
  • Shanghai Star market
  • $255m
  • 25 million shares at 68.58 yuan each
  • Taking orders July 29, expected to start trading early Aug.
  • CITIC Securities
• CloudMinds Inc. (Chinese cloud-based robot developer)
  • NYSE
  • Filed July 12
  • $500m (placeholder amount subject to change)
  • Citigroup, JPMorgan Chase, UBS
• Super Energy Power Plant Infrastructure Fund (Thai electricity producer and distributor)
  • Thailand
  • Subscription period July 22-31
  • Up to 5.15b Baht ($167m)
  • Bangkok Bank
• AMTD International Inc. (Hong Kong investment bank)
  • New York
  • Filed July 25
  • $176 million
  • AMTD Global Markets Ltd.

More ECM situations Bloomberg is following:

• China’s Beijing Kunlun Tech is relaunching its process to float Grindr after it said a U.S. national security panel dropped its opposition to the plan, Reuters reported, citing a filing to the Shenzhen stock exchange
• Intense Chinese demand for initial public offerings on the country’s new stock board is sending valuations for new listings sky-high, with one biotech firm pricing its shares at about 486 times reported earnings
• China is blocking dozens of initial public offerings, intensifying a crackdown on suspect disclosures and alleged fraud that’s seen as essential to deepening its equity market
• LG Display Co. seeks as much as $700m selling convertible bonds with 1.0% to 1.5% coupon, according to terms for the deal obtained by Bloomberg

SEE ALSO

• Asia ECM Weekly Agenda
• IPO data
• U.S. ECM Watch
• EU ECM Watch

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