Greater China IPO Watch 2018

Greater China IPO Watch surveys stock market listings in Greater China and provides a comparison with the world’s major markets 2 | Greater China IPO Watch 2018

This Greater China IPO Watch provides an overview of Initial public offering in this publication is defined the initial public offerings (IPOs) and listing activities to include all share listings on a platform where the on Greater China’s principal stock markets, including entity’s shares have not been listed previously. Hong Kong, Shanghai, Shenzhen and Taiwan. The This report has been prepared by the mainland China/ analysis covers companies which were listed on these Hong Kong Capital Market Services practice of PwC. markets from 1 January to 31 December 2018. For comparability purposes, all figures in this report have been translated into United States Dollars (USD) at the applicable closing exchange rate at the end of each year. Greater China IPO Watch 2018 | 3

Introduction to the four stock markets

The Hong Kong stock market consists National Equities Exchange and of two separate boards: the Main Board Quotation system in mainland China, (MB) and the GEM. The MB facilitates which serves as a national share transfer fund raising by companies with track system for SMEs to transfer shares and records of certain minimum profit, raise funds, is not covered within this revenue, operating cash flow and/ review. or market capitalisation levels as set The Taiwan Stock Exchange (TSEC) out in the Hong Kong listing rules. The facilitates capital raising by companies GEM focuses on companies which do (both Taiwan and foreign companies) not fulfil the profitability/track record with track records of certain minimum requirements of the Main Board but profit and capital base. Technology- have growth potential and a minimum based companies without track records level of positive operating cash flow. but with a certain minimum amount Companies established in mainland of paid-in capital and projected net China (the People’s Republic of China) worth can also be listed. Most of the that are listed in Hong Kong are referred companies in Taiwan have to list their to as H-share companies. Companies shares for a minimum of six months on owned by mainland China nationals or the over-the-counter market, Emerging enterprises which are listed in Hong Stock on the Gretai Securities Market Kong through Hong Kong or overseas (GTSM) before listing on TSEC. This incorporated holding companies are review does not include data from the referred to as Red Chip companies. GTSM. Both the Shanghai and Shenzhen Stock Exchanges consist of A-share and B-share listing platforms on which companies established in mainland China can list. The Shenzhen Stock Exchange has a Small and Medium Enterprise (SME) Board and a ChiNext Board to facilitate fund-raising of small and medium-sized enterprises and growing venture enterprises. Shanghai and Shenzhen A-share, and shares listed on SME and ChiNext can only be traded by mainland China nationals and enterprises, while B-shares can only be traded by overseas investors. 4 | Greater China IPO Watch 2018

Contents

6 Foreword

7 Overview of the IPO markets in Greater China

8 IPOs by stock exchange

9 IPO vs. other equity fund raising

10 IPOs by P/E multiples

12 IPOs by share price performance on the first day of listing

14 IPOs by industry sector Greater China IPO Watch 2018 | 5

15 Turnover value and market capitalisation

16 Top ten IPOs in Greater China from 2014 to 2018

18 Top ten IPOs in world history

19 Top ten IPOs worldwide in 2018

20 Comparison with the US markets

21 Comparison with the European markets

22 Comparison with major Asian markets

23 Listed debt issued in mainland China and Hong Kong 6 | Greater China IPO Watch 2018

Foreword

The global IPO market in 2018 continued Mainland regulators continue to work on the improving trend seen in the second developing a mechanism to allow large half of 2017 as economic growth Chinese companies listed on overseas continued and volatility remained at exchanges to issue depositary receipts low levels creating favourable IPO in China which should provide an market conditions. However, this slowed attractive capital raising alternative to a towards the end of the year reflecting number of listed issuers. reduced levels of investor confidence in The long-term fundamentals in the the capital markets due to geopolitical region remain positive with GDP instability and rising interest rates. growth and urbanisation forecast to Overall IPO activity across the region continue, the region’s capital markets Kennedy Liu grew with a 10% increase in funds are expected to strengthen in 2018, Partner, Head of Capital Markets and raised. There was an increase in larger following a period of regulatory reform Accounting Advisory Services IPOs (>USD 1 billion), with the top 10 and a continued pro-growth strategy PwC mainland China and Hong Kong IPOs contributing 47% of the region’s by the leadership in China creating a total IPO proceeds compared to 21% supportive environment for IPOs. in 2017. This was primarily driven by Investor demand for new issuers from an increase in the number of IPOs Greater China is anticipated to continue from the information technology and as the long term fundamentals in the telecommunications sector in 2018. region remain relatively attractive Hong Kong led the world in terms of the compared to other major markets with amount of funds raised and produced GDP growth and urbanisation forecast the highest number of IPOs in the to continue. However, the global region. IPO volumes increased by 25% investment backdrop remains uncertain from 2017 to USD 36.8 billion, attracting with further interest rate rises inevitable 63% of the region’s funds raised with in the medium term and geopolitical many enterprises viewing it as their first concerns remaining. This emphases choice of fundraising platform in Asia the need for companies to be confident and worldwide. in their chosen strategy and for listing applicants to be IPO ready in order to A number of new economy and biotech take advantage of the continued short issuers successfully completed listings IPO windows. in 2018 following recent rule changes which have bolstered Hong Kong’s role as a regional financing platform. Changes were made to the regulatory review process for IPOs in mainland China to improve the quality of listing applicants in late 2017. This slowed momentum in the mainland China IPO market in 2018 with IPO numbers falling by 76%. Greater China IPO Watch 2018 | 7

Overview of the IPO markets in Greater China

The amount of funds raised from IPOs increased by 10% from USD 52.1 billion in 2017 to USD 57.5 billion in 2018. The number of IPOs in Greater China decreased from 631 in 2017 to 354 in 2018 reflecting an increase in average IPO sizes. The Greater China Exchanges continued to lead the world in terms of number of IPOs and funds raised.

Number of IPOs from 2014 to 2018

631

381 378 354

268 Number of IPOs

2014 2015 2016 2017 2018 Year

Amount of IPO funds raised from 2014 to 2018

58.8 57.5 52.1 n 47.3 o i

l 43.4 l i b

D S U

2014 2015 2016 2017 2018 Year

Source: PwC Research 8 | Greater China IPO Watch 2018

IPOs by stock exchange

In aggregate, funds raised increased by 10% across the Greater China markets. IPO proceeds in Hong Kong increased by 124% from 2017 rising to USD 36.8 billion, leading the world in terms of funds raised. IPO volumes increased by over 25% in Hong Kong rising to 218 IPOs compared to 174 in 2017, whereas volumes in Shanghai and Shenzhen decreased by 76% due to changes in the regulatory approval process. Hong Kong’s GEM had another strong year in terms of IPO volumes, attracting 75 new listing applicants in 2018 compared to 80 in 2017. IPO funds raised remained consistent at USD 0.7 billion. The Taiwan Stock Exchange hosted 31 IPOs raising USD 0.5 billion, compared to 21 in 2017, raising USD 0.3 billion.

Funds raised in Hong Kong Hong Kong Shenzhen Shenzhen Shanghai A Taiwan Total USD billion Main Board GEM SME Board ChiNext 2014 No. of IPOs 103 # 19 43 31 51 21 268 % of total 38.4% 7.1% 16.1% 11.6% 19.0% 7.8% 100.0% Funds raised 29.7 0.3 5.5 3.6 3.6 0.7 43.4 % of total 68.4% 0.7% 12.7% 8.3% 8.3% 1.6% 100.0%

2015 No. of IPOs 104 # 34 89 44 86 24 381 % of total 27.3% 8.9% 23.4% 11.5% 22.6% 6.3% 100.0% Funds raised 33.5 0.3 16.7 2.8 4.9 0.6 58.8 % of total 57.0% 0.5% 28.4% 4.8% 8.3% 1.0% 100.0%

2016 No. of IPOs 81# 45 103 46 78 25 378 % of total 21.4% 11.9% 27.3% 12.2% 20.6% 6.6% 100.0% Funds raised 24.6 0.6 14.7 3.3 3.7 0.4 47.3 % of total 52.0% 1.3% 31.1% 7.0% 7.8% 0.8% 100.0%

2017 No. of IPOs 94# 80 214 81 141 21 631 % of total 14.9% 12.7% 33.9% 12.8% 22.4% 3.3% 100.0% Funds raised 15.7 0.7 21.2 6.2 8.0 0.3 52.1 % of total 30.1% 1.3% 40.7% 11.9% 15.4% 0.6% 100.0%

2018 No. of IPOs 143# 75 57 19 29 31 354 % of total 40.4% 21.2% 16.1% 5.4% 8.2% 8.7% 100.0% Funds raised 36.1 0.7 12.7 3.3 4.2 0.5 57.5 % of total 62.8% 1.2% 22.1% 5.7% 7.3% 0.9% 100.0%

# included listing by introduction & switch from GEM to Main Board without raising funds in Hong Kong: 13 in 2014, 17 in 2015, 9 in 2016, 14 in 2017 and 13 in 2018. Source: PwC Research Greater China IPO Watch 2018 | 9

IPO vs. other equity fund raising

The relative proportion of funds raised 326.1 from IPOs in Greater China versus total equity funds raised increased from 287.9 265.8 16% in 2017 to 26% in 2018. This was n

primarily due to decreases in other o i

l 215.1 l equity funds raised in Shenzhen, which i b

164.6

decreased by over 53% from USD 106 D S

billion in 2017 to USD 49.9 billion in U 2018, in Hong Kong which decreased by 44% from USD 58 billion in 2017 to USD 32.7 billion in 2018, and in 58.8 Shanghai, which decreased by 20% 43.4 47.3 52.1 57.5 from USD 95.3 billion in 2017 to USD 76.3 billion in 2018. 2014 2015 2016 2017 2018 Year

Other equity funds raised (USD billion) IPO funds raised (USD billion)

Hong Kong Shanghai Shenzhen Taiwan Greater China total Amount in USD billion Amount % Amount % Amount % Amount % Amount % 2014 IPO funds raised 30.0 25% 5.5 9% 7.2 10% 0.7 21% 43.4 17% Other equity funds raised 91.3 75% 58.8 91% 62.4 90% 2.6 79% 215.1 83% Total equity funds raised 121.3 100% 64.3 100% 69.6 100% 3.3 100% 258.5 100%

2015 IPO funds raised 33.8 24% 16.7 12% 7.7 7% 0.6 14% 58.8 15% Other equity funds raised 109.4 76% 117.6 88% 95.5 93% 3.6 86% 326.1 85% Total equity funds raised 143.2 100% 134.3 100% 103.2 100% 4.2 100% 384.9 100%

2016 IPO funds raised 25.2 40% 14.7 13% 7.0 5% 0.4 12% 47.3 14% Other equity funds raised 37.5 60% 101.4 87% 146.0 95% 3.0 88% 287.9 86% Total equity funds raised 62.7 100% 116.1 100% 153.0 100% 3.4 100% 335.2 100%

2017 IPO funds raised 16.4 22% 21.2 18% 14.2 12% 0.3 4% 52.1 16% Other equity funds raised 58.0 78% 95.3 82% 106.0 88% 6.5 96% 265.8 84% Total equity funds raised 74.4 100% 116.5 100% 120.2 100% 6.8 100% 317.9 100%

2018 IPO funds raised 36.8 53% 12.7 14% 7.5 13% 0.5 8% 57.5 26% Other equity funds raised 32.7 47% 76.3 86% 49.9 87% 5.7 92% 164.6 74% Total equity funds raised 69.5 100% 89.0 100% 57.4 100% 6.2 100% 222.1 100%

Source: PwC Research 10 | Greater China IPO Watch 2018

IPOs by P/E multiples

In 2018, P/E multiples in Greater China for IPOs increased compared to levels shown in 2017. The percentage of IPOs offered at a P/E multiple of over 30 times was 17% in 2018 compared to 6% in 2017. P/E multiples in Hong Kong increased, with 27% of IPOs offered at P/E multiples of above 30 compared to 21% in 2017. P/E multiples in Shanghai decreased from 93% of IPOs offered at P/E multiples of above 20 in 2017 to 74% in 2018. P/E multiples in Shenzhen decreased from those shown in 2017, with approximately 90% still being offered at multiples above 20 reflecting the high growth nature of the listing companies. In Taiwan, P/E multiples decreased compared to those seen in 2017 with 66% of IPOs with a P/E less than 10 times.

P/E ratio

452

211

127

Number of IPOs 58 37 404047 52 43 44 2032 2128 18 2024 3 9 7 6 8 2 2 1 4 2 3 2

5 5-9.99 10-14.99 15-19.99 20-29.99 30-49.99 50-99.99 100-199.99 200-499.99500-999.99 >1000 N/A

2016 2017 2018 Greater China IPO Watch 2018 | 11

P/E ratio by stock exchange 2016

110

74 Number of IPOs 20 27 22 25 9 1710 15 2 1 6 2 6 2 5 3 2 7 6 2 5

5 5-9.99 10-14.99 15-19.99 20-29.99 30-49.99 50-99.99 100-199.99 200-499.99500-999.99 >1000 N/A

Hong Kong Shanghai Shenzhen Taiwan

P/E ratio by stock exchange 2017

210 197

Number of IPOs 42 32 35 20 13 1111 19 2 5 1 1 6 1 3 1 7 1 2 1 1 1 2 1 5

5 5-9.99 10-14.99 15-19.99 20-29.99 30-49.99 50-99.99 100-199.99 200-499.99500-999.99 >1000 N/A

Hong Kong Shanghai Shenzhen Taiwan

P/E ratio by stock exchange 2018

Number of IPOs 42 414143 42 27 25 16 12 17 2 7 3 1 1 4 114 1 2 1 2 1 4 2 2

5 5-9.99 10-14.99 15-19.99 20-29.99 30-49.99 50-99.99 100-199.99 200-499.99500-999.99 >1000 N/A

Hong Kong Shanghai Shenzhen Taiwan

Source: PwC Research 12 | Greater China IPO Watch 2018

IPOs by share price performance on the first day of listing

Around 80% of new listings in 2018 closed their first day of trading with a price above the IPO issue price indicating continued favourable pricing for IPO investors. In 2018, 8% of IPOs enabled investors to have a first day gain of more than 50% compared to 5% in 2017, including 11% of IPOs in Hong Kong.

Share price performance by year – % change of first day closing price over IPO price

463

241

Number of IPOs 139

78 59 46 36 15 18 16 25 2125 1514 1715 2 4 4 9 13 12 6 9 11 2 1 2 6 4 1 7 1 9 1 1 2 13

-20% to -10% to -0.01% to 0% to 10% to 20% to 50% to 100% to 200% to 300% to 600% to 1000% to 2000% to N/A -49.99% -19.99% -9.99% 9.99% 19.99% 49.99% 99.99% 199.99% 299.99% 599.99% 999.99% 1999.99% 3000%

2016 2017 2018 Greater China IPO Watch 2018 | 13

Share price performance – % change of first day closing price over IPO price by stock exchange 2016

124 103 Number of IPOs 35 15 11 9 12 9 9 9 2 4 1 4 2 3 6 2 6 7 1 4

Hong Kong Shanghai Shenzhen Taiwan

Share price performance – % change of first day closing price over IPO price by stock exchange 2017

214222

Number of IPOs 55

24 18 21 9 12 8 14 4 1 4 3 6 3 1 1 4 1 1 2 3

Hong Kong Shanghai Shenzhen Taiwan

Share price performance – % change of first day closing price over IPO price by stock exchange 2018

Number of IPOs 57 48 34 18 20 19 15 15 10 9 13 2 1 5 4 2 2 1 2

Hong Kong Shanghai Shenzhen Taiwan

Source: PwC Research 14 | Greater China IPO Watch 2018

IPOs by industry sector

Most of the IPO candidates in Greater This was accompanied by a significant There was also an increase in the China are from the retail, consumer increase in the relative proportion relative proportion of applicants from goods and services sector, which of funds raised from the information the financial sector, from 5% in 2017 to represented 37%, 40% and 46% of the technology and telecommunication 13% in 2018 and a decrease from the total number of IPOs in 2016, 2017 and sector, from 7% in 2017 to 36% in 2018 industrial sector from 41% in 2017 to 2018 respectively. reflecting a number of sizeable IPOs, 21% in 2018. and overtaking the retail, consumer There was an increase in the relative This was offset by a reduction in the goods and services sector to become proportion of applicants from relative proportion of funds raised in the the region’s primary sector for the information technology and industrial sector, which fell from 28% in fundraising. telecommunication sector from 10% in 2017 to 8% in 2018. 2017 to 15% in 2018.

Number of IPOs by industry sector

4% 4% 5% 9% 5% 13% 10%

37% 201 13% 40% 201 2018 46% Total number of IPOs: Total number of IPOs: Total number of IPOs: 15% 378 631 354

41% 21% 37%

Funds raised by industry sector 2% 4% 3%

28% 19% 21% 201 40% 201 34% 2018 Total IPO funds raised: Total IPO funds raised: Total IPO funds raised: USD 47.3 billion USD 52.1 billion USD 57.5 billion 7% 48% 16% 8% 36% 6% 28%

Energy & utilities Financials Information technology & telecommunications Industrials Retail, consumer goods & services

Source: PwC Research Greater China IPO Watch 2018 | 15

Turnover value and market capitalisation

The market capitalisation of the Greater China capital markets reverted to 2017 levels with a 5% net increase in the number of listed companies. The turnover value of the Greater China capital markets decreased from 2017 levels. This was primarily driven by decreases of 25% in Shanghai and 23% in Shenzhen offset by a 21% increase in Hong Kong. Turnover in the Greater China capital markets for 2018 was 157% of its closing market capitalisation in 2018 (2017: 148%); while it was 70% (2017: 52%) in the United Kingdom and 119% (2017: 81%) in the United States.

Market data as of 31 Dec (Amount in USD billion)

2016 2017 2018

Number Number Number Stock Turnover Market Turnover Market Turnover Market of listed of listed of listed Exchange value capitalisation value capitalisation value capitalisation companies companies companies

Hong Kong 1,713 2,099.6 3,153.3 1,794 2,758.3 4,313.7 1,926 3,357.4 3,795.1 Main Board

Hong Kong 260 15.0 40.1 324 19.1 35.9 389 16.3 23.8 GEM

Shanghai A 1,175 7,155.5 4,083.5 1,389 7,793.7 5,075.7 1,443 5,838.1 3,906.2

Shanghai B 51 14.2 15.2 51 8.5 15.3 51 5.7 12.0

Shenzhen A* 1,859 11,167.6 3,200.1 2,078 9,471.9 3,609.8 2,124 7,262.2 2,396.7

Shenzhen B 49 7.2 12.4 49 6.5 12.8 48 3.6 8.0

Taiwan 892 518.8 842.9 907 808.5 1,073.6 928 968.7 959.2

Total 5,999 20,977.9 11,347.5 6,592 20,866.5 14,136.8 6,909 17,452.0 11,101.0

* include Shenzhen SME Board and Shenzhen ChiNext

Source: PwC Research 16 | Greater China IPO Watch 2018

Top ten IPOs in Greater China from 2014 to 2018

The top ten IPOs in Greater China accounted for 47% of the total funds from IPOs in 2018 (2017: 21%). Over the last five years, Hong Kong and Shanghai have consistently hosted the largest IPOs in Greater China. The ability of these two markets to absorb large IPOs demonstrates the significant capital pool available in Greater China. In 2018, 7 IPOs each raised over USD 1 billion, compared to 5 in 2017 and 10 in 2016. Average deal sizes of the top ten IPOs increased from USD 1.1 billion in 2017 to USD 2.7 billion in 2018. Hong Kong again led the way for larger IPOs, notably in the information technology and telecommunications sector.

2014 Company Funds raised (USD million) Stock Exchange Dalian Wanda Commercial Properties Co Ltd 4,039 Hong Kong CGN Power Co Ltd 3,638 Hong Kong HK Electric Investments Ltd 3,111 Hong Kong WH Group Ltd 2,360 Hong Kong BAIC Motor Corporation Ltd 1,532 Hong Kong Shengjing Bank Co Ltd 1,502 Hong Kong China CNR Corporation Ltd 1,293 Hong Kong Harbin Bank Co Ltd 1,131 Hong Kong Guosen Securities Co Ltd 1,127 Shenzhen SME

Luye Pharma Group Ltd 878 Hong Kong Total 20,611 (48%)

2015 Company Funds raised (USD million) Stock Exchange

HTSC 5,000 Hong Kong Guotai Junan Securities Co Ltd 4,633 Shanghai GF Securities Co Ltd 4,139 Hong Kong China Huarong Asset Management Co Ltd 2,541 Hong Kong China Reinsurance (Group) Corporation 2,115 Hong Kong China National Nuclear Power Co Ltd 2,033 Shanghai Legend Holdings Corporation 1,975 Hong Kong China Energy Engineering Corporation Ltd 1,900 Hong Kong Orient Securities Co Ltd 1,546 Shanghai China Railway Signal & Communication Corporation Ltd 1,455 Hong Kong Total 27,337 (46%) Greater China IPO Watch 2018 | 17

2016 Company Funds raised (USD million) Stock Exchange Postal Savings Bank of China Co Ltd 7,629 Hong Kong China Resources Pharmaceutical Group Ltd 1,942 Hong Kong China Zheshang Bank Co Ltd 1,938 Hong Kong Bank of Shanghai Co Ltd 1,537 Shanghai China Merchants Securities Co Ltd 1,379 Hong Kong Everbright Securities Co Ltd 1,151 Hong Kong BOC Aviation Ltd 1,128 Hong Kong DFZQ 1,080 Hong Kong CSC Financial Co Ltd 1,057 Hong Kong Bank of Jiangsu Co Ltd 1,042 Shanghai Total 19,883 (42%)

2017 Company Funds raised (USD million) Stock Exchange Guotai Junan Securities Co Ltd 2,207 Hong Kong Zhongan Online P & C Insurance Co Ltd 1,750 Hong Kong China Literature Ltd 1,225 Hong Kong Zhongyuan Bank Co Ltd 1,190 Hong Kong Guangzhou Rural Commercial Bank Co Ltd 1,188 Hong Kong Yixin Group Ltd 866 Hong Kong China Galaxy Securities Co.,Ltd. 628 Shanghai Caitong Securities Co.,Ltd. 628 Shanghai Razer Inc 607 Hong Kong Huaneng Lancang River Hydropower Inc. 600 Shanghai Total 10,889 (21%)

2018

Company Funds raised (USD million) Stock Exchange

China Tower Corporation Ltd 7,507 Hong Kong

Xiaomi Corporation 5,441 Hong Kong Meituan Dianping 4,232 Hong Kong Foxconn Industrial Internet Co., Ltd. 3,943 Shanghai Ping An Healthcare and Technology Co Ltd 1,120 Hong Kong Jiangxi Bank Co Ltd 1,098 Hong Kong WuXi AppTec Co Ltd 1,057 Hong Kong Haidilao International Holding Ltd 965 Hong Kong

BeiGene Ltd 905 Hong Kong The People's Insurance Company (Group) of China Limited 874 Shanghai

Total 27,142 (47%)

Source: PwC Research 18 | Greater China IPO Watch 2018

Top ten IPOs in world history

The top four IPOs in world history are based in mainland China/Hong Kong. Greater China stock exchanges account for three out of the top ten IPOs in world history. In 2014, Alibaba Group, the China-based e-commerce business, completed an IPO on the New York Stock Exchange raising USD 25 billion, the largest IPO recorded, surpassing the IPO of Agricultural Bank of China Limited in 2010 which raised a total of USD 22.4 billion. The IPO of Industrial and Commercial Bank of China Ltd is the third largest IPO in world history, raising USD 22 billion in 2006. In 2018, Softbank Corp raised USD 21.1 billion in Japan.

Rank Listing year Company Stock Exchange Country USD million

1 2014 Alibaba Group Holding Ltd New York Stock Exchange China 25,032

2 2010 Agricultural Bank of China Ltd Hong Kong Stock Exchange China 22,430 & Shanghai Stock Exchange

3 2006 Industrial and Commercial Bank of China Ltd Hong Kong Stock Exchange China 22,041 & Shanghai Stock Exchange

4 2018 Softbank Corp Tokyo Stock Exchange Japan 21,140

5 2010 AIA Group Ltd Hong Kong Stock Exchange China (Hong Kong) 20,465

6 2008 VISA Inc New York Stock Exchange United States 19,650

7 1998 NTT Mobile Communications Network Inc Tokyo Stock Exchange Japan 18,379

8 2010 General Motors Co Ltd New York Stock Exchange United States 18,140

9 1999 Ente Nazionale per I'Energia Elettrica Milan Stock Exchange Italy 17,408

10 2012 Facebook Inc Nasdaq Stock Exchange United States 16,007

Source: Thomson Financial Greater China IPO Watch 2018 | 19

Top ten IPOs worldwide in 2018

Four of the top ten IPOs in the world in 2018 were from Greater China, compared to one in 2017.

Rank Listing month Company Stock Exchange Country USD million

1 December Softbank Corporation Tokyo Stock Exchange Japan 21,140

2 August China Tower Corporation Ltd Hong Kong Stock Exchange China 7,507

3 July Xiaomi Corporation Hong Kong Stock Exchange China 5,441

4 March Siemens Healthineers Ag Frankfurt Stock Exchange Germany 5,168

5 October Knorr-Bremse AG Frankfurt Stock Exchange Germany 4,432

6 September Meituan Dianping Hong Kong Stock Exchange China 4,232

7 June Foxconn Industrial Internet Co., Ltd. Shanghai Stock Exchange China 3,943

8 May AXA Equitable Holdings Inc New York Stock Exchange United States 3,157

9 January Pagseguro Digital Ltd. New York Stock Exchange United States 2,606

10 March iQIYI Inc Nasdaq Stock Exchange United States 2,424

Source: Thomson Financial 20 | Greater China IPO Watch 2018

Comparison with the US markets

The amount of IPO funds raised in Value of equity trading the US markets (NYSE and Nasdaq) increased by 23% from USD 44.4 billion 20,978 20,867 19,341 in 2017 to USD 54.7 billion in 2018, with 17,452 17,318 a 22% increase in IPO volumes. 16,790 14,535 The average deal size in the US was USD 0.23 billion, consistent with that 11,071 11,336 seen in 2017. The average deal size in Greater China was USD 0.16 billion in 2018 which is USD billion double the USD 0.08 billion seen in 2017. The value of equity trading in Greater China decreased from 2017 levels to around USD 17,452 billion. The value Greater China Nasdaq NYSE of equity trading in the US increased by 40% to USD 36,131 billion in 2018 2016 2017 2018 compared to USD 25,871 billion in 2017. Source: World Federation of Exchange website

(Amount in USD billion)

2016 2017 2018

Number Funds Average Number Funds Average Number Funds Average Stock Exchange of IPOs raised deal size of IPOs raised deal size of IPOs raised deal size

Hong Kong 126 25.2 174 16.4 218 36.8

Shanghai 103 14.7 214 21.2 57 12.7

Shenzhen 124 7.0 222 14.2 48 7.5

Taiwan 25 0.4 21 0.3 31 0.5

Greater China total 378 47.3 0.13 631 52.1 0.08 354 57.5 0.16

Nasdaq 87 10.2 121 15.2 173 26.6

NYSE 35 11.6 78 29.2 69 28.1

Nasdaq + NYSE total 122 21.8 0.18 199 44.4 0.22 242 54.7 0.23

Source: PwC Research Greater China IPO Watch 2018 | 21

Comparison with the European markets

The IPO markets in Europe (including Value of equity trading exchanges in the EU member countries plus Switzerland and Norway) 20,978 20,867 decreased 10% by volume and 20% by 17,452 funds raised in USD terms. In 2018, the average deal size in Europe decreased from USD 0.15 billion in 2017 to USD 12,603 0.13 billion in 2018. 10,653 11,290 In 2018, USD 57.5 billion of IPO funds

were raised in Greater China by 354 USD billion IPOs, representing an average deal size of USD 0.16 billion, comparable with that seen in Europe. The value of equity trading in Europe Greater China Europe increased by 12% from USD 11,290 billion in 2017 to USD 12,603 billion in 2016 2017 2018 2018. Source: PwC Research

(Amount in USD billion)

2016 2017 2018

Number Funds Average Number Funds Average Number Funds Average Stock Exchange of IPOs raised deal size of IPOs raised deal size of IPOs raised deal size

Hong Kong 126 25.2 174 16.4 218 36.8

Shanghai 103 14.7 214 21.2 57 12.7

Shenzhen 124 7.0 222 14.2 48 7.5

Taiwan 25 0.4 21 0.3 31 0.5

Greater China total 378 47.3 0.13 631 52.1 0.08 354 57.5 0.16

London (Main Board) 28 5.6 55 12.4 47 10.7

London (AIM, SFM, 39 1.4 48 2.6 35 1.7 PSM )

London total 67 7.0 0.10 103 15.0 0.15 82 12.4 0.15

Europe total 265 26.4 0.10 348 52.7 0.15 313 41.9 0.13

Source: PwC Research 22 | Greater China IPO Watch 2018

Comparison with major Asian markets

The number of IPOs in Japan remained The number of IPOs in Singapore Malaysia continued its development consistent with 2017 at 93. The IPO (including Main Board and Catalist) also as a capital market with IPO numbers funds raised in Japan increased from remained at 2017 levels with 15 IPOs increasing by 70% to 22 in 2018 with a USD 6 billion in 2017 to USD 29.4 billion raising USD 0.5 billion in 2018. decrease in IPO proceeds from USD 1.7 in 2018, primarily due to the IPO of billion in 2017 to USD 0.1 billion in 2018 Australia experienced a 14% decrease Softbank Corp which raised USD 21.1 due to an absence of larger IPOs. in IPO volumes from 114 in 2017 to 98 in billion alone. 2018 despite a 30% increase in funds raised reflecting an increase in more sizeable IPOs.

(Amount in USD billion)

2016 2017 2018

Number Funds Average Number Funds Average Number Funds Average Stock Exchange of IPOs raised deal size of IPOs raised deal size of IPOs raised deal size

Hong Kong 126 25.2 174 16.4 218 36.8 Shanghai 103 14.7 214 21.2 57 12.7 Shenzhen 124 7.0 222 14.2 48 7.5 Taiwan 25 0.4 21 0.3 31 0.5 Greater China total 378 47.3 0.13 631 52.1 0.08 354 57.5 0.16

Japan Exchange 88 9.8 88 6.0 92 29.4 Group (Tokyo and Osaka)* Sapporo Securities - - 2 - 1 - Exchange Nagoya Stock 2 - 2 - - - Exchange Fukuoka Stock ------Exchange Japan total^ 90 9.8 0.11 92 6.0 0.07 93 29.4 0.32

Main Board 6 1.5 2 0.2 3 0.4 Catalist 11 - 13 0.2 12 0.1 Singapore total 17 1.5 0.09 15 0.4 0.03 15 0.5 0.03

Malaysia 12 0.2 0.02 13 1.7 0.13 22 0.1 0.005

Australia 86 5.4 0.06 114 4.9 0.04 98 6.4 0.07

* include J-REIT ^ the offering value includes global offering

Source: PwC Research Greater China IPO Watch 2018 | 23

Listed debt issued in mainland China and Hong Kong

Mainland China Hong Kong The Mainland China debt market Hong Kong is a liberal debt market the Hong Kong Stock Exchange or issue primarily comprises bonds listed on where international investors are free privately where trading occurs outside stock exchanges or the inter-bank to invest in debt instruments and there stock exchange. Generally, larger issues market. In 2018, the number of issues are no restrictions on foreign borrowers. tend to be completed via a listing. increased by 28% compared to 2017 The bond market in Hong Kong has for However, a significant number of issuers with a 17% increase in amounts some time been a significant market continue to issue private debt securities raised. This reflects a rising interest place for issuers and investors, in both which are not listed on an exchange. rate environment and a policy focus domestic and foreign currencies. The There was a 4% decrease in the volume on reducing leverage at domestic range of product offerings, the open of listed debt issues in Hong Kong in institutions. The People’s Bank of China access for issuers and investors, both 2018 with a 12% decrease in funds continues to promote open access to domestic and international, and the raised reflecting smaller issue sizes certain foreign corporates, financial increasing significance of offshore RMB compared to 2017. institutions and sovereign entities to the bond issuances make Hong Kong one interbank debt market to issue RMB- of the most frequented international denominated bonds (so called ‘Panda’ bond markets in Asia. Issuers can select bonds) in mainland China. whether they wish to list instruments on

Bond issued in mainland China 6,845 6,906

5,388

1,715.5 1,698.5 1,455

2016 2017 2018

Bond issued in Hong Kong

316 303

211 152.3 134.6 99.9 Number Amount raised (USD billion)

2016 2017 2018 Source: HKEx, Thomson and Wind 24 | Greater China IPO Watch 2018

Capital Market Services practice

The Capital Market Services practice is part of the Assurance practice of PwC. It is comprised of a core team of specialists who provide a broad range of services to companies and/or investment banks in connection with all aspects of capital market transactions. These include preparation for becoming a public listed company, selecting the right market and advisory team, advising on group restructuring, accounting and regulatory issues, and acting as reporting accountants. The mainland China/Hong Kong Capital Market Services practice is part of the PwC global network of capital markets specialists. . Mainland China/Hong Kennedy Liu +852 2289 1881 [email protected] Kong Capital Market Edmond Chan +852 2289 1128 [email protected] Services practice partners Rayon Chu +86(755) 8261 8990 [email protected] and directors: Pauline Leung +852 2289 1809 [email protected] Xuemei Li +86(10) 6533 2927 [email protected] Thomas Lo +852 2289 1139 [email protected] Jie Shen +86 (21) 2323 3659 [email protected] Eddie Wong +852 2289 2896 [email protected] Doris Tu +86(10) 6533 2850 [email protected] Fanny Yang +86 (21) 2323 2593 [email protected] George Yuen +86(10) 6533 2060 [email protected] Rita Chan +852 2289 2327 [email protected] Geoffrey Tang +852 2289 1886 [email protected]

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We provide organisations with the professional service they need, wherever they may be located. Our highly qualified, experienced professionals listen to different points of view to help organisations solve their business issues and identify and maximise the opportunities they seek. Our industry specialisation allows us to help co-create solutions with our clients for their sector of interest. Greater China IPO Watch 2018 | 25

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About Greater China IPO Watch Greater China IPO Watch surveys all new listings on Greater China’s principal stock markets and market segments. All of the graphs, tables, and data used within this publication have been collated or extracted by the Capital Market Services practice research team. In collating and extracting this information, we rely upon data provided directly by various exchanges, and extracted from the World Federation of Exchanges website. We do not carry out any confirmation procedures on that information.

How can PwC help? Going public is a major challenge for any company and there are many decisions that will need to be taken prior to an IPO. Management will need to steer the company through a complicated and often time-consuming process in order to be ready for an IPO. Planning and good preparation are crucial for a successful flotation. It’s not simply a question of appointing advisors but about ensuring that the company is ready to be listed on the public markets and that it is able to meet the challenges that such a listing brings. If you are planning on listing, there will be many questions you will want to ask. These are just some of the questions we will be able to help you find answers to: • What is an appropriate valuation for my business? • What does being a public company really mean? • How long will it take to complete an IPO? • Do we have the right resources? • Are my people ready? • How to implement a stock based compensation plan? • Do we have an attractive story for potential investors? • What is the best way to articulate our strategy? • What are the corporate governance issues we need to address? • What are the internal control procedures we need to implement? • How many non-affiliated/independence directors should we have on the board?

• What are the implications of a concurrent offering of shares to sophisticated investors in the US (via 144A) or elsewhere (via Reg S)? • How do our accounting policies compare with other companies in the sector? • Is my finance function ready? • Are my operations run and managed effectively? • What additional disclosures will we need to provide as a public company? • Will it be a problem if one of our subsidiaries has a modified audit opinion?

• Do we need to restate our track record for recent acquisitions and disposals? • How will an IPO affect our existing incentive arrangements? • Any other possible listing venues? © 2019 PricewaterhouseCoopers Limited. All rights reserved. PwC refers to the Hong Kong member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. HK-20190221-1-C1