Jul 31, 2019 03:53 AM

China's STAR Market Lifts Chinese Banks’ League Table Ranking

Chinese investment banks take top positions in Asian IPO deals this year. Photo: VCG
Chinese investment banks take top positions in Asian IPO deals this year. Photo: VCG

(Bloomberg) — As China’s new STAR Market comes down from its feverish first day surge, Chinese banks that worked on the deals are still enjoying the high.

Chinese investment banks account for seven of the top 10 banks in Asia for initial public offerings (IPOs) this year, the best showing since Bloomberg started compiling data in 1999. The last time Chinese banks accounted for more than half of the top 10 banks was in 2011.

Citic Securities and China International Capital Corp. (CICC) top the list, with 9% and 7.4% of market share, data compiled by Bloomberg show. Both banks worked on the STAR board IPOs of China Railway Signal & Communication Corp. — which raised $1.6 billion — and Montage Technology Co., which raised $417.5 million.

But the bank that got the biggest boost from the Star market appears to be China Securities, which worked on seven of the 25 IPO debutantes and jumped seven places from a year earlier. Haitong Securities climbed the most, by eight spots, although it worked on only two STAR IPOs.

Goldman Sachs Group Inc. and Morgan Stanley were the only foreign banks involved in the new board’s debut IPOs, both working as underwriters on the China Railway Signal deal. The mainland banks have been muscling in on deals for years as they expand their market share in Asia, and the pipeline of companies looking to list on the tech board could give them that extra lift.

More than 120 companies have joined the queue to join the tech board in Shanghai, with UBS Securities expecting them to raise more than 100 billion yuan ($14.5 billion) and for the high-tech board to contribute 0.9% to 2.1% of the total revenue of brokers in 2019. On average, underwriters for the first 25 companies earned 7% of deal value, higher than in Hong Kong, where banks have earned about 2.8% for IPOs larger than $50 million.

Morgan Stanley is the only Western bank to feature in the top five this year, having worked on three of the biggest IPOs in Asia this year — China Railway Signal, Hansoh Pharmaceutical Group Co. and Embassy Office Parks REIT. Last year it ranked number one, followed by CICC and Goldman Sachs.

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