Bigger and Bigger
The HKEX (Hong Kong Exchange & Clearing Limited) has conducted eight pre-revenue listings of biotech companies so far, with a total fund raised of USD three billion. The average amount of funds raised by these firms is four to five times higher than the US average, with the largest listing raising over USD 900 million and their projected average daily turnover standing at USD two million.
This represents a new chapter for the HKEX. We have created a whole ecosystem and funding platform that welcomes other biotech- and healthcare-related companies to list on the Hong Kong market
Michael Chan, HKEX
In addition to these eight pre-revenue biotechs, four revenue-generating biotech and biotech-related firms have also been listed in Hong Kong in the past 12 months, taking the total amount raised to USD 4.7 billion.
Chan, HKEX’s SVP and head of the international issuer’s marketing efforts, was keen to highlight the Exchange’s welcoming attitude to potential issuers. He stated, “This represents a new chapter for the HKEX. We have created a whole ecosystem and funding platform that welcomes other biotech- and healthcare-related companies to list on the Hong Kong market.”
He added, “The ecosystem is taking shape nicely, largely thanks to the support and guidance of market veterans – from investors to practitioners, pharma company heads, scientists, and media.”
Chan also noted that this highly successful past 12 months is just the beginning. “Our pipeline is also looking strong,” he told the conference crowd. “We have another ten companies that have already submitted their applications, one of which is Hutchison Chi-Med, which is seeking a third listing for the Group, on top of its US and London listings. Further, we have more waves of companies that will submit applications in the coming months.”
The Bridge to China
One advantage that Hong Kong offers compared to other potential listing destinations is its access to capital from both China and further afield. Chan explained that, “In terms of capital and liquidity, in all eight cases that we have listed, there has been a fair breakdown in terms of their investor base – from international sources and from China.”
He continued, “the companies that list in Hong Kong have been able to choose their international vs Chinese investor ratio. We are happy to report that the Hong Kong market has functioned well to facilitate access to different investor bases.”
Looking Forward: More Diversity
Chan is looking to foster greater diversity in the companies that list on the HKEX to ensure its continued growth. This diversity will come through a greater range of company types, with more players from the medical devices field; a more diverse geographical group of companies, with more players from Europe and the US; and more diversity in the way in which companies list, with some issuers preparing dual listings and others as spinoffs of multinational pharma companies.
Chan also noted that HKEX is not averse to adjusting its rules and regulations to ensure greater efficiency. He concluded, “12 months ago in our consultation paper we confirmed that we will continue to revise our rules from time to time to adjust to what the market needs. We are not looking to make wholesale changes, but we do want to enhance and streamline our listing process and our listing regulations, making the market even more accessible and easier for issuers to come and list here.”
First published by PharmaBoardroom https://pharmaboardroom.com/articles/bio-2019-hong-kong-biotech-ipos-soaring-in-line-with-china-pharma-market/