A-share IPO activity underwent a slowdown, pace of expected to improve in 2025; Hong Kong IPO activity rebounded, ranking top 4 in global IPO

• Global IPO activity continued to slow down in 2024. 1,162 IPOs with proceeds amounted to US$117.3 billion are expected, representing a 14% and 7% decrease year-over-year (YOY) by number of deals and proceeds respectively.
• Hong Kong came back to the fourth place globally with 64 IPOs and proceeds of HK$83.4 billion.
• The A-share IPO policies have tightened, and many companies that originally planned to list on A-shares have turned to Hong Kong for listing; in particular, mainland technology companies have become keener to list in Hong Kong.

EY Greater China Region (EY) releases the Chinese mainland and Hong Kong IPO report today, reviewing IPO activity in 2024 globally and in Greater China, as well as its outlook for 2025.

According to the report, the global IPO activity continued to slow down in 2024. 1,162 IPOs with proceeds amounted to US$117.3 billion are expected, representing a 14% and 7% decrease YOY by number of deals and proceeds respectively. Improving market conditions and a backlog of exit demand from private equity are supporting the 2025 equity capital markets, with IPOs likely to pick up across regions, although performance will vary from company to company.

There are 314 IPOs with proceeds of US$18.0 billion expected in the Indian market, which is leading globally in terms of both number of deals and proceeds. It leads in IPO number significantly, compared to 117 deals on the Nasdaq in the U.S., which ranked second. Hong Kong Stock Exchange (HKEX) is expected to come back to the fourth place with 64 IPOs and proceeds of HK$83.4 billion.

The lowest average A-shares IPO proceeds since 2018

In 2024, according to public data as of 30 November 2024, 95 IPOs are expected to list on the A-share market, with proceeds of RMB61.8 billion, representing a decrease of 70% and 83% YOY by number of deals and proceeds respectively. The number of deals and the proceeds are at the lowest level since 2014.

Due to the lack of large-scale IPOs and dropping P/E ratios of new issue shares, the average IPO proceeds fell below RMB1 billion to RMB651 million. Increased by 19 percentage points, 84% of IPOs raised less than RMB1 billion. No IPO raised more than RMB5 billion.

Ringo Choi, EY Asia-Pacific IPO Leader, says: “In September this year, the Federal Reserve cut interest rates for the first time since March 2020, representing a downward shift in interest rate expectations, easing the nondollar liquidity. A-share and Hong Kong markets staged rally as the Chinese government introduced a package of policies in late September to boost the economy.”

STAR saw the toughest year of IPO activity

ChiNext ranked top by both number of deals and proceeds. 2024 saw a substantial decline across all boards due to the tightening of IPO policies. This is the toughest year for STAR¹ since its establishment. As one of the key areas under strict regulation on IPO activity, STAR reported the most significant decline on a yearly basis, hitting a record low. Proceeds of the top 10 IPOs in 2024 amounted to RMB16.8 billion, representing 27% of the total proceeds for the year, down 80% YOY. The A-share market lacked large-scale IPOs. The IPO topped in proceeds would have ranked out of top 20 in 2023.

Increased concentration in certain sectors is observed in A-share IPO. Six out of the top 10 IPOs came from technology industry, while the rest were mainly from hard and core technology sector. Six out of the top 10 IPOs were from STAR, with proceeds accounting for 49% of top 10. Choi says: “IPO activity in 2024 was highly concentrated in a few sectors, particularly in industrials, technology² and materials sectors. In 2024, the industrials, technology and materials sectors ranked the top 3 in terms of both number of deals and proceeds, with number of deals and proceeds accounting for 88% and 90% of the total respectively.”

Rebound in Hong Kong IPO activity

There are 64 IPOs with total proceeds over HK$83.4 billion expected for the year, according to public data as of 30 November 2024, representing a decrease of 6% in number and an increase of 80% in proceeds raised.

Liquidity in the Hong Kong stock market has improved, driven by a positive market sentiment. Jacky Lai, EY³ Hong Kong Capital Market Services Spokesperson, says: “The Federal Reserve's interest rate cuts and reforms by HKEX to enhance market efficiency, including streamlining the listing application process⁴ and allowing trading during bad weather⁵, have vitalized the Hong Kong market. It is further supported by Chinese mainland regulators introducing initiatives to facilitate the listings of numerous leading companies, prominent enterprises, and unicorns in Hong Kong.” The Securities and Futures Commission (SFC) of Hong Kong and HKEX have optimized the approval timeline for new listings, aiming to expedite the process for qualified A-share companies and fast-track listings for those with significant market capitalization. To further respond to market demands and enhance the competitiveness of the Hong Kong listing platform, HKEX has modified the minimum listing requirements for specialist technology companies⁶. Lai comments: “As the A-share IPO market tightens, a significant portion of A share listing candidates may switch to Hong Kong and will list in next year. This shift is driven by the globalization of Chinese mainland enterprises and their need to expand internationally.”

Mega IPO boosts the average proceeds

In 2024, the average Hong Kong IPO proceeds amounted to HK$1.304 billion, up 91% YOY. A consumer sector mega IPO significantly boosted the average IPO proceeds. There was one IPO that raised more than HK$30 billion and three raised more than HK$5 billion in 2024. There was only one IPO that raised more than HK$5 billion in 2023. Excluding the mega IPO raising over HK$10 billion, the average proceeds in 2024 amounted to HK$758 million, down 11% YOY. However, the phenomenon of shrinking IPO issuance has gradually improved. Main board IPOs where new shares issued accounted for 5% or less of the total shares, have also dropped to less than 20% overall.

Increased cornerstone investors with Chinese state background

In 2024, around 70% of the Hong Kong IPOs’ cornerstone investors are with Chinese state background⁷, up 10 percentage points YOY. Technology industry is most favored by cornerstone investors with Chinese state background, followed by biotechnology & healthcare and retail & consumer products industry. Approximately 72% of the IPOs invested by cornerstone investors with Chinese state background closed higher than the offer price in their first-day trading.

95% of the Hong Kong IPOs were oversubscribed, up 4 percentage points YOY. The top 10 IPOs in 2024 raised a total of HK$63.0 billion, representing 76% of the total proceeds of the year. Proceeds of the top 10 IPOs increased 165% YOY.

Peter Chan, EY Hong Kong Technology, Media & Entertainment and Telecommunications Assurance Leader, says: “Technology IPOs have emerged in 2024 as the most prevalent by number, driven by an increased inclination among technology firms, particularly those from the Chinese mainland, to pursue listings in Hong Kong. This trend is bolstered by supportive policies from both the Chinese mainland and the HKEX. Retail & consumer products enterprises from the Chinese mainland are expediting their listings in Hong Kong, with these sectors achieving the highest level of IPO activity in terms of funds raised in 2024. If this single large-scale consumer products industry IPO is excluded, the amount of funds raised by technology IPOs would have ranked first among Hong Kong IPO activities.”

IPO activity in the US speeds up

It is estimated that 53 companies from the Chinese mainland and Hong Kong will list on the US market, raising a total of US$2.914 billion. The number of IPOs and proceeds increased by 56% and 245% respectively YOY. A total of 54 companies from the Chinese mainland passed the filing for listing in US in 2024 as of the end of November 2024, an increase of over 100% YOY. As of the end of November 2024, the approval rate of listing filings by companies from the Chinese mainland going listed in the US exceeded 70%, higher than the approval rate of listing filings going listed in Hong Kong. IPOs going listed in the US are diversified by industry, with retail & consumer products industry leading the way. Chan says: “The average scale of IPOs going listed in the US in 2024 amounted to US$54.97 million, an increase of 121% YOY, but still at historically low levels in the last decade.”

Market outlook

It is expected that, in 2025, the policy framework for the A-share capital market will become clearer. A-share IPO activities are expected to remain stable overall in 2025, with signs of improvement, gradually normalizing the pace of IPO issuance. On top of the capital market’s increasing focus on “new quality productivity”, the State Council and other departments issued respective documents in 2024 supporting the listing of eligible companies in sectors such as new materials big data centers, seed industries⁸, and winter sports⁹. These initiatives are likely to boost IPO activities in these industries.

With the Chinese government announcing economic stimulus measures, introducing policies to support domestic enterprises listing overseas and the Federal Reserve entering a rate cut cycle, Hong Kong's IPO activity in 2025 may see a rebound, potentially reclaiming a leading position globally. Large Mainland enterprises, industry leaders and Chapter 18C companies are expected to flourish, boosting Hong Kong IPO activity. With the streamlined IPO vetting process in Hong Kong and the introduction of allowing A-share companies with a market value of over HK$10 billion to undergo expedited vetting, the “A+H” shares lineup is likely to further expand. Meanwhile, Chinese mainland companies will continue switching from A-share to Hong Kong IPOs. Large-scale IPOs are likely to mainly come from traditional industry companies with larger scale and better liquidity.

1. Shanghai Stock Exchange’s Science and Technology Innovation Board
2. Include telecommunication sector
3. Ernst & Young, Hong Kong
4. HKEX Joint Statement on Enhanced Timeframe for New Listing Application Process (https://www.hkex.com.hk/News/Regulatory-Announcements/2024/241018news?sc_lang=en)
5. HKEX Severe Weather Trading Arrangements Overview (https://www.hkex.com.hk/Services/Trading-hours-and-Severe-Weather-Arrangements/Severe-Weather-Arrangements/Overview?sc_lang=en)
6. Joint Announcement of the SFC and the Exchange in Relation to Temporary Modifications to Requirements for Specialist Technology Companies and De-SPAC Transactions (https://www.hkex.com.hk/News/Regulatory-Announcements/2024/240823news?sc_lang=en)
7. Chinese state background includes government and state-owned enterprises. The statistics cover the top 10 cornerstone investors in IPOs.
8. Seeds, breeding livestock and poultry industries
9. The entire industrial chain, including ice and snow culture, equipment and tourism

-Ends-

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About the data

The data presented in the press release are based on priced IPOs from 1 January to 30 November 2024, and expected IPOs by 31 December 2024. Sources of data include EY statistics, Wind Information, the China Securities Regulatory Commission, Eastmoney, Hong Kong Stock Exchanges and Nasdaq.