China-based companies raise the most money via U.S. IPOs since 2014
A Lufax flag displayed during an event in Shanghai, China, to mark the company’s initial public offering on the New York Stock Exchange.
Arjun Kharpal | CNBC
BEIJING – Investor appetite for Chinese companies in U.S. equity markets soared to a six-year high in 2020 despite tension between the two countries.
China-based companies raised $ 11.7 billion through 30 US public offerings this year, according to a December 17 report by Renaissance Capital.
This is the highest raise of capital since 2014, when 16 China-based companies raised $ 25.7 billion, the report said. Alibaba made up most of this year’s increase as its largest IPO to date.
Major Chinese initial public offerings in the US this year included financial technology company Lufax and online real estate platform Ke, both of which were among the ten largest public offerings in America this year according to Renaissance Capital.
The grocery shipping company Dada, invested by Walmart, the electric vehicle start-ups Xpeng and Li Auto and BlueCity, owner of China’s largest LGBTQ dating app, were represented in New York this year.
Chinese companies’ excitement for US markets came despite a turbulent year for relations between the world’s two largest economies. In addition to the ongoing trade tensions, the administration of US President Donald Trump has tried to deter American capital from investing in Chinese assets.
The coronavirus pandemic has also slowed cross-border business activity, leading to an international dispute over whether Covid-19 originated in China and how much China is responsible for the pandemic.
Earlier this year, some Chinese companies postponed their plans to list in the US due to the pandemic and an accounting scandal at Luckin Coffee in April. Nasdaq delisted the company this summer, just under a year after the Chinese start-up became the first company since 2000 to achieve a valuation of $ 3 billion in less than 24 months.
Other Chinese companies have fallen dramatically. Since its listing on the New York Stock Exchange in January, Phoenix Tree’s shares have fallen 76% on concerns over the financial health of subsidiary Thank you, a home rental company.
Phoenix Tree is the worst IPO of the year, Renaissance said. Overall, the company’s analysis found that Chinese companies that raised at least $ 100 million this year averaged an overall return of 81%.
Renaissance Capital data included Hong Kong-based companies. The analysis excluded unique IPO situations such as the listing of special purpose acquisition companies (SPACs) and best effort IPOs, as well as deals less than $ 5 million or companies with a market capitalization of less than $ 50 million.