(Yicai) Dec. 11 -- Overseas investors are regaining confidence in initial public offerings by Chinese firms on stock markets outside the Chinese mainland after their involvement nearly hit an all-time low last year, according to Goldman Sachs’ co-head of equity capital markets for Asia ex-Japan.

Interest has rebounded this year both in terms of the number of foreign participants in offshore Chinese IPOs and the scale of funding, James Wang told Yicai yesterday.

Chinese companies have raised USD41 billion offshore so far this year, mainly in Hong Kong and the United States, according to Goldman Sachs. IPO proceeds accounted for 30 percent, or USD12.3 billion, of the total amount.

Seven companies raised more than USD500 million each via IPOs outside of the Chinese mainland, including USD4.6 billion by Midea in Hong Kong, the city’s biggest listing in more than three years, and USD1.6 billion by Amer Sports in New York.

Between 2010 and 2021, Chinese businesses banked a total of USD80 billion a year on average through offshore IPOs, refinancing, and convertible bonds, Wang said. USD34.8 billion of that resulted from going public.

But the past two years have been a period of adjustment, with Chinese firms listing offshore securing only USD23.4 billion last year, USD6.3 billion of which were IPO proceeds.

The recovery is evident in the growing number of big IPO projects, increasing participation of long-term investors, and the relatively stable performance of shares after listing, Wang pointed out.

Wang predicts offshore Chinese listings will raise between USD50 billion and USD60 billion next year, an increase of 25 percent to 30 percent on this year. This turnaround is expected to further boost the convertible bond and refinancing markets next year, he noted.

But he also warned that Chinese issuers should approach market opportunities with caution. During the initial recovery period, overseas investors are mainly interested in high-quality companies, so not all IPOs will be successful, Wang said.

Chinese IPO-hopefuls must temper their expectations, accepting scaled-down offerings and lower-than-expected pricing, as well as consider geopolitical factors, especially the impact of China-US relations on offshore IPOs, Wang said.

Editor: Futura Costaglione