After three lean years, Hong Kong bankers are looking forward to a surge in fees in 2014 as the city regains its swagger with a slew of big-money initial public offerings.
With the value of IPOs in Hong Kong seen doubling to over $32 billion this year as major economies pick up steam, Greater China could account for more than half of all 2014 investment banking fees for the Asia-Pacific region, excluding Japan.
An upsurge in debt offerings and a cautious restart for IPOs in mainland China will also fuel a rise in first-half revenue at investment banks. Since 2009 and 2010, when a bumper crop of deals helped Hong Kong overtake New York as the world's biggest IPO market, banks have seen equity issuance and fees shrivel.
Tycoon Li Ka-shing's Power Assets Holdings is leading the pack of 2014's mega-deals with the planned sale of up to $3.6 billion of shares in an electricity business later this month. Handling the sale and booking most fees from it will be Goldman Sachs and HSBC.
While last year was depressed in terms of IPOs, Greater China still accounted for 49 percent of Asia-Pacific ex-Japan investment banking fees, according to Thomson Reuters/Freeman Consulting estimates. About 36 percent of the $9.86 billion in fees came from equity deals, the data show.
Advisory firm PwC estimates Hong Kong IPOs could raise $32.2 billion in 2014, the highest since 2010 and nearly double the 2013 tally of $17.1 billion. That would make 2014 the fourth-biggest year on record for new listings in the city, Thomson Reuters data show.
With economic activity improving in the United States, Japan and some countries in Europe, risk appetite and demand for new listings is expected to grow in 2014, benefiting Hong Kong and China listings, analysts said.
"Sentiment will be good for IPOs this year," said Jasper Chan, corporate finance officer at brokerage Phillip Securities, which provides margin loans to retail investors looking to buy into IPOs. "You can see from the margin amounts, how deals are oversubscribed sometimes more than 1,000 times. You can see how hot the IPO market is now."
Investors still picky
Deals expected this year include a $5 billion listing from Chinese meat processor Shuanghui International Holdings, and offerings from health and beauty products retailer A.S. Watson & Co and e-commerce giant Alibaba Group.
Shuanghui International's deal is expected for the first half of the year. An Alibaba IPO of around $15 billion could take place in the second half of the year at the earliest, with Hong Kong considered a possible location.
Goldman Sachs and HSBC are handling the A.S. Watson listing and other stock sales as well as the Power Assets deal.
Other banks likely to benefit from the surge include Morgan Stanley, which is handling the Shuanghui deal with Citic Securities and UBS. Citic should also benefit from its position as top underwriter of new listings in mainland China.
(Read more: Chinese IPOs: Hot, hot, hot!)
While the deal pipeline is full, Power Assets' decision to cut its targeted proceeds by about a third provided evidence that IPOs will still need to be pitched accurately. The Power Assets move reflected a lower valuation on the asset being sold, and also a decision by the parent to retain a bigger slice of the business.
"It is still a buyers' market. Investors will continue to be choosy," said Philippe Espinasse, a former equity capital markets banker at both UBS and Nomura. "Issuers will need to be realistic on valuations and, importantly, will need to get support from cornerstones to get deals done," said Espinasse, author of "IPO: A Global Guide".
In Hong Kong, IPO bankers typically secure groups of institutional investors who commit to deals, acting as their cornerstones.
The gradual, bumpy resumption of IPOs in Shanghai and Shenzhen will also ultimately provide a boost to deal volumes in Asia-Pacific region after zero activity for more than one year in China.
Chinese companies could to raise 250 billion yuan ($41.3 billion) from new listings in Shenzhen and Shanghai exchanges in 2014, according to a PwC forecast. That level would make it the second-biggest year on record for IPOs in mainland China, though the early days of the restart have been troubled.
(Read more: China approves new IPOs, ending listing freeze)
The first batch of about 50 companies to list in China in January alone should bring in 44 billion yuan in proceeds, consulting firm EY estimated last month.