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More jumbo stock offerings from some of China's biggest onshore-listed companies are making their way to Hong Kong, supported by demand from global funds, improved valuations and market reforms, according to the nation's biggest investment bank.
"Some leading A-share companies with a large market capitalisation in various industries [are looking] to issue H shares, which could attract some international long-term funds and institutional investors," said Xu Jia, deputy head of the investment banking department at China International Capital Corporation (CICC).
Investors from Europe, Asia-Pacific and mainland China had been encouraged by a rebound in market sentiment over the past quarter, with many new initial public offerings (IPOs) trading higher on their debuts, the bank said at a briefing on Tuesday.
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China's biggest condiment maker Foshan Haitian Flavouring and Food submitted an application on Monday to list its shares. It has selected CICC, Goldman Sachs and Morgan Stanley as joint sponsors, with media reports suggesting the Shanghai-listed firm was looking to raise at least US$1.5 billion.
Contemporary Amperex Technology, or CATL as the world's largest producer of batteries for electric vehicles is known, could raise US$5 billion in one of Hong Kong's largest IPOs in recent years, according to media reports. The Shenzhen-listed firm announced its plan last month, pending approvals from shareholders and regulators.
The firm was poised to hire Bank of America, CICC, CSC Financial and JPMorgan Chase as lead arrangers, according to a Bloomberg report on Tuesday.
"We anticipate that there will be about five jumbo IPOs" based on available information, said Kenny Wen, head of investment strategy at KGI Asia. He did not specify the time frame. "Three will be in the US$1 billion tier, one in the US$2 billion tier and another in the US$5 billion tier."
The return of billion-dollar IPO deals will whet the appetite of Wall Street bankers, who trailed Chinese rivals in Hong Kong last year as deal volume jumped. China Merchants Bank was credited with US$1.1 billion from 38 deals, while CICC came in second with US$970 million from 24 deals, according to data compiled by the London Stock Exchange Group.
UBS and Goldman ranked fifth and sixth, the highest among foreign investment banks.