HK also attractive choice after revising listing requirements
With the U.S. market still riding high and China's internet sector continuing to grow, a fresh wave of Chinese IPOs is expected in the U.S. this year, Chinese analysts said.
Online content providers in such sectors as culture, entertainment and education are most likely to sweep through the U.S. IPO market this year, according to Cen Saiyin, vice president of Cornerstone Capital.
"Consumers are willing to pay for online content, which you could not have imagined several years ago," Cen told the Global Times on Thursday.
A number of Chinese companies are reportedly considering IPOs in the U.S. in 2018.
China's popular video-streaming service, iQiyi, has "confidentially" filed for IPO in the U.S., Thomson Reuters publication IFR reported on Monday, citing sources.
The deal, which could potentially raise about $1 billion, is expected to take place late in the current quarter or in the second quarter of 2018, IFR added.
Bilibili, China's top online platform for streaming Japanese animation, is also planning a U.S. IPO that could raise at least $200 million, Bloomberg reported in October.
Among the potential IPO candidates, one unicorn - Xiaomi, one of the biggest smartphone brands in China - stands out.
According to a Bloomberg report on Monday, Xiaomi is picking banks ahead of an IPO at a possible valuation of $100 billion, and the smartphone vendor is yet to decide on the timing and location of the share sale, be it the U.S. or Hong Kong.
In the auto and transport sector, Chinese ride-hailing company Didi Chuxing and electric vehicle start-up NIO are reportedly planning to get listed in the U.S.
"Didi has no IPO plans at the moment," a company spokesperson told the Global Times on Thursday. NIO could not be reached as of press time.
"The bull market and its deep awareness of high-technology shares in the U.S. generate relatively high valuations for Chinese companies seeking IPOs there," Cen said, adding that is the reason many domestic companies aim to list in the U.S. in 2018 or the year after.
High expectations for IPOs this year follow a robust year in 2017.
Data from financial service provider Wind showed that 24 Chinese companies went public on the U.S. stock market in 2017, up 1.4 times from the previous year and the most active year since 2011.
Among these companies, which in total raised $3.58 billion, those related to consumer lending were the most active, including such listings as online lender Qudian Inc and peer-to-peer lending platform ppdai.com.
As of December 2017, there were 186 Chinese companies trading in the U.S., 60 of which were internet and technology companies, taking up the largest portion.
"Owing to the continued rally of the U.S. bull market, there was a surge of Chinese IPOs in the U.S. in 2017," King Li, EY assurance partner, told the Global Times on Thursday.
In terms of industry, Chinese IPOs went from internet companies providing social and media services in 2011 to integrated e-commerce platforms in 2014, then to education and internet financial services in 2017, reflecting development trends in China's new economy, Li said.
"Compared with domestic boards that require high and continuous profitability, these internet companies prefer the U.S., where rules about profitability are less stringent and investors are optimistic about high-tech start-ups," Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times Thursday.
Besides, the strong profit record of such domestic conglomerates as Alibaba Group Holding, listed on the New York Stock Exchange in 2014, and JD.com Inc which joined the NASDAQ the same year, has greatly boosted U.S. investors' confidence in Chinese companies' performance.
Though many Chinese companies are considering IPOs in the U.S., Hong Kong continues to be an attractive destination, especially after relaxed rules, experts said.
"Compared with Hong Kong, the U.S. market is more mature and international for a domestic company if it wants to enhance its global presence, yet the appeal of Hong Kong cannot be ignored since it just relaxed its IPO rules," Yang noted.
Hong Kong, one of the world's biggest equity capital-raising centers, proposed plans at the end of 2017 to allow dual-class shares, a move to attract technology listings in competition with New York and London.