Who Said the Chinese U.S. IPO Was Dead?

Hong Kong may be churning IPOs out at a record clip, but a tsunami of Chinese IPOs are set for U.S. exchanges.
Jennifer ChanApr 28,2021,16:39

Nothing brings people together like money--and the desire to make even more money. Even a global pandemic didn't seem to briing out international cooperation to an acceptable degree. But despite growing political tensions between the U.S. and China, Chinese companies are still looking to U.S. exchanges, and U.S. investors are still looking for Chinese companies.

In fact, 60 Chinese companies are planning to go public in the U.S. this year, said Vera Yang, chief China representative for the New York Stock Exchange, according to CNBC.

The money is there.

According to Renaissance Capital, since the pandemic, more and more money has been entering the market, enabling 30 China-based companies last year to raise the most capital in U.S. IPOs since 2014. With record high valuations on record high enthusiasm, Chinese startups and their investors are looking to get a slice of this American cash cow. Legislation targeting Chinese companies (or at least inspired by Chinese frauds) is being overlooked as Chinese companies, in spite of all the issues and tensions, look to the American investor for capital.

A tidal wave of new listings.

Blueshirt managing director Gary Dvorchak, who advises Chinese companies interested in listing in the U.S., said this to CNBC regarding the Chinese IPO pipeline: “It’s a tidal wave. Our phone is ringing off the hook. We’re trying to hire more people. We haven’t seen anything like this since the Nasdaq bubble in ’99."

He went on to say that it all "Makes me worried.”
While there is 1990s-like enthusiasm, there is a bit more caution being exercised by American investors particuarly when it comes to Chinese companies. In fact, many Chinese stocks listed in the U.S. and Hong Kong have fallen after their initial public offerings this year. Fear of overly high valuation fears, therefore, is prevalent.
“The after-IPO pricing trend is not as good as last year,” said Ringo Choi, Asia-Pacific IPO leader at EY to CNBC. Choi expects the IPO tidal wave to wane a bit in the third quarter of this year.

Topics:IPO, China