Buoyed by a rush of capital out of China and new listing rules designed to entice large Chinese and international technology and biotech companies to list on HKEX, Hong Kong reclaimed the top spot in global IPO fundraising rankings at the beginning of August. The trading debuts of Xiaomi, China Tower and BeiGene brought HKEX’s year-to-date fundraising to HK$187 billion ($23.82 billion), ahead of the New York Stock Exchange and Nasdaq, according to HKEX.
As lead adviser on many new IPOs CLSA, the international arm of CITIC Securities, is poised to benefit from heightened listing activity in Hong Kong. Xiaomi, the first dual-class share structure company listed in Hong Kong, and BeiGene, the first Nasdaq-listed company to seek a dual listing in Hong Kong under the new rule targeted at pre-revenue biotech companies, are just two recent examples of blueprint mega-listings that CLSA advised on.
CLSA has an exceptional pipeline of more than 30 IPO mandates, including more than 10 currently filed with HKEX and 11 completed, as of mid-September 2018. As Richard Taylor, CLSA’s head of corporate finance and capital markets, puts it, “There’s a lot going on in capital markets.”
“CLSA has a very strong pipeline coming out of China because of our excellent relationships through CITIC Securities. Approximately 80% of our business is China related. Being owned by CITIC Securities puts us in a unique position, into and out of China,” said Frank Yu, head of corporate finance and capital markets. This is a differentiator, he added, that distinguishes CLSA’s client relationships from other international banks: “CLSA can offer clients international investment banking expertise and outstanding global distribution with deep and far reaching connections into China.”
AWARD-WINNING COMBINATION
CLSA’s ability to understand the needs of Chinese and international clients, its long-standing regional relationships and its dynamic growth since its acquisition by CITIC Securities, are a few of the reasons why FinanceAsia’s editors voted CLSA Best Investment Bank in Hong Kong among China financial institutions and CITIC Securities Best DCM House in China; Best ECM House in China; and Best Belt and Road Bank in China, in 2018.
In addition to expanding its corporate finance and capital markets services, including equity capital markets (ECM), debt capital markets (DCM), and its new equity-linked business, CLSA is actively establishing a presence in new Belt and Road (BRI) markets, to further capitalise on outbound Chinese capital flows.
OPENING THE WAY FOR BELT AND ROAD FLOWS
With offices in India, Indonesia, Singapore, the Philippines, Malaysia and Thailand, CLSA describes its place in China’s BRI as a sweet spot.
Richard Taylor believes CLSA’s regional knowledge perfectly matches BRI needs. “We are from a state-owned enterprise (SOE) background and we understand Chinese business,” he said. When the Shanghai and Shenzhen stock exchanges wanted to acquire 25% of the Dhaka bourse, they sought CLSA’s expertise and on-the-ground knowledge. In July 2018 the deal was sealed, representing a landmark BRI deal and paving the way for future cooperation between the two countries.
As part of the larger CITIC Group, CITIC Securities and CLSA are front and centre of public and private initiatives driving the BRI. Frank Yu says: “We can offer Chinese clients all kinds of products, not only IPOs, ECM or DCM. Clients value our advisory capabilities and our relationship network that extends deep into China, but also internationally.”
NEW STRIDES INTO CHINA OUTBOUND M&A
With a track record of 220 M&A deals worth $54 billion since 1990 in over 20 countries, CLSA’s M&A advisory business is thriving and also leveraging China outbound opportunities. Commenting on new trends Taylor said. “We help Chinese corporates looking for outbound investment opportunities, but we are also talking to potential sellers in Europe and Australia and helping them find suitable acquirers in China.”
In Australia, for example, CLSA recently advised China’s By-Health Group on its acquisition of Life-Space Group, and Australian company PRP Diagnostic Imaging on its sale to Hengkang Medical Group in China in 2017.
CONVENING ASIAN CORPORATES AND GLOBAL INVESTORS
Each year, CLSA introduces Asia's corporates to global fund managers and potential investors at the CLSA Investors' Forum in Hong Kong. The forum brings together more than 1,500 institutional investors from 30 countries representing $35 trillion AUM, and more than 300 public and private corporations from across the Asia-Pacific region. This year's invitation-only event runs from 10-14 September 2018. More detail about this event is available here.
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