Of the top 10 international companies that advised the Hong Kong Stock Exchange’s 82 IPOs filed last year and completed in March 2022, only two were UK-based companies – a sign that UK companies are losing ground. battle for a share of Hong Kong’s initial public offering market – a market they once dominated.
US companies have fared much better, but even they face fierce competition for IPOs in Hong Kong: an analysis by Law.com International found that Chinese companies are getting the lion’s share of the work.
Chinese law firms Commerce & Finance and Jingtian & Gongcheng were the most active, with Commerce & Finance advising 12 issuers and representing underwriters in at least 17 other listing transactions.
Beijing-based Jingtian & Gongcheng has advised on 20 IPOs, representing issuers on seven of those deals. The company acted on the listings of SCE Intelligent Commercial Management and NetEase-backed music streaming site Cloud Village, which raised $225 million and $422 million, respectively.
Tian Yuan followed with 18 transactions in total, eight of which were acting on behalf of issuers. King & Wood Mallesons came after Tian Yuan with 16 deals, with an equal number of representations for issuers and underwriters.
One of King & Wood’s biggest Hong Kong IPO tips last year was China’s Dongguan Rural Commercial Bank for its $1.3 billion debut.
Han Kun Law Offices acted on 11 deals, including that of JD Logistics’ massive $3.2 billion debut.
Law.com International’s analysis also shows that listing on the Hong Kong Stock Exchange was not easy. The strict prerequisites for listing in Hong Kong weighed heavily, but general market volatility also played a significant role. Records show that 362 IPO applications were filed with the Hong Kong Stock Exchange last year, but of these, 220 expired while 60 are still active. This means that to date, only 82 candidates who filed last year have managed to register.
In the competition to advise on these 82 IPOs, the only two UK law firms to make the top 10 were Clifford Chance and Herbert Smith Freehills.
Clifford Chance advised 14, mostly for issuers, and Herbert Smith Freehills advised 11, mostly for underwriters. The two companies advised on the $276 million IPO of SF Intra-city Industrial Co. Ltd., one of China’s largest on-demand delivery service platforms, in September.
Among US companies, Davis Polk & Wardwell advised 14 listings last year. Skadden, Arps, Slate, Meagher & Flom tied with Herbert Smith with 11 deals, although he focused on action for issuers rather than underwriters.
The real change for American companies has been the focus on the biotech, pharmaceutical, healthcare and technology sectors. Companies such as Sidley Austin, O’Melveny & Myers and Wilson Sonsini Goodrich & Rosati, which have particular expertise in these areas, have been able to leverage this expertise for IPO work. Sidley Austin advised 10 issuers on their successful ratings last year, O’Melveny & Myers advised on eight ratings, and Wilson Sonsini advised on six.
O’Melveny & Myers, Wilson Sonsini and Davis Polk advised on the $192 million Hong Kong IPO of hair health specialist Yonghe Medical Group Co. Ltd in December.
Kirkland & Ellis and Sullivan & Cromwell acted on five transactions each; both are heavier at representing policyholders. One of Sullivan & Cromwell’s biggest deals was the $1.8 billion debut of Xpeng Inc. in Hong Kong.
At the bottom of the table, the other UK-based firms advising on listings were Linklaters, which acted on three successful listings last year, while Allen & Overy advised one, both acting solely to subscribers.
For offshore companies, Maples and Calder and Conyers Dill & Pearman swept the market with at least 19 and 15 deals respectively, leaving rival Harneys behind with six deals.