Several mega-funded Chinese tech unicorns, including smart phone and electronics maker Xiaomi, may be angling to go public later this year with huge, multibillion-dollar offerings, heightening investor interest in China's booming technology sector. Behind the scenes, New York and Hong Kong are competing for these listings. At stake could be deals worth well more than a quarter-trillion dollars.
"Collectively, once these China tech companies start trading, they could surpass market capitalization of a couple hundred billion dollars or more," said David Williams, founder and CEO of investment banking firm Williams Capital Advisors in Palo Alto.
Matt Kennedy, an analyst with Renaissance Capital, agrees. "This year could be an even bigger year for China IPOs," he said, noting many will be mega offerings.
Last year 137 Chinese companies went public, collectively raising $32.2 billion, according to Renaissance Capital. Tech IPOs were among the best performers of the year, including Apple supplier Foxconn, which raised $347 million at a valuation of $2.3 billion; and Tencent-backed China Literature, which raised $1.1 billion at a valuation of $6.4 billion. Both companies listed on the Hong Kong Stock Exchange.
Sixteen Chinese firms went public and collectively raised $3.4 billion on U.S. exchanges, more than double the number in 2016, according to Renaissance Capital. Notable ones: Tencent-backed mobile search engine Sogou; five Chinese online lenders, including Qudian and PPDai; Alibaba-backed logistics firm Best; as well as four education companies, including Bright Scholar Education.
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So far this year, the Chinese IPO pipeline remains robust. Momentum is building for Xiaomi, the Beijing-based maker of the popular Mi smartphone series, to list on the HKSE, according to one informed source. Xiaomi may go public in the second half of 2018 at a valuation of about $50 billion, according to some reports.