It’s almost 20 years since Industrial and Commercial Bank of China raised $22bn in a Hong Kong listing — the largest in history at the time. Since then, the city has been the go-to place for Chinese companies seeking capital and access to international investors.
In recent years, rising geopolitical tensions, Beijing’s tightening capital controls and the growing influence of mainland exchanges in Shanghai and Shenzhen have tarnished its lustre. It may now be making a comeback.
BYD’s $5.6bn share sale this week is a big deal for the city — the largest in Hong Kong in four years and the biggest automotive follow-on offering globally in a decade. The Chinese electric vehicle maker is profitable, cash rich and generates strong free cash flow. So when it raises capital, it signals a strategic shift rather than financial necessity.
The choice of Hong Kong over mainland China carries weight. For decades, Chinese companies leveraged Hong Kong as a stepping stone for international expansion, a trend that had slowed in recent years.
BYD’s fundraising echoes the approach taken by many Chinese companies including Anta Sports, which raised $1.5bn in Hong Kong in a follow-on offering in 2023, to strengthen its financial position and accelerate its global expansion. Its subsidiary Amer Sports also pushed further into global markets, listing in the US last year.
Beyond strategic positioning, China’s strict renminbi controls remain a factor in driving companies to Hong Kong. Transferring capital overseas from the mainland is costly and slow. Hong Kong is also an attractive alternative for companies looking for faster, easier access to international investors. Listings in the US have become increasingly fraught with geopolitical risks since 2020, as stricter regulations require foreign companies to comply with auditing standards or face potential delisting.
For BYD, the stakes are particularly high. Domestic sales remain strong, with JPMorgan expecting the group to sell 5.5mn vehicles this year, a 30 per cent increase from the previous year. But its real test lies beyond China, as BYD has set an aggressive export target of 800,000 units, nearly double last year’s overseas sales — a goal that will require greater global buy-in to achieve.
Meanwhile, Hong Kong’s IPO market has been staging a comeback. Last year, total funds raised nearly doubled from the previous year. As long as the IPO market remains favourable, PwC estimates that fundraising in the city could reach HK$160bn this year, around twice the total funds raised last year.
A growing preference for Hong Kong over mainland exchanges could signal a broader realignment — one that reaffirms the city’s role as the gateway for Chinese companies with global ambitions.
june.yoon@ft.com