HONG KONG — The boom in initial public offerings in Hong Kong has offered a long-awaited release valve for private equity firms sitting on aging China portfolios, top fund executives said at an industry panel Tuesday.
After years of muted dealmaking and frozen exits, the opportunity to list in Hong Kong at attractive valuations has lifted sentiment, with companies raising $18.2 billion via IPOs this year as of October, putting the financial hub on track to become the world’s largest listing destination this year.
The rebound in Hong Kong-listed stocks — the Hang Seng Index is up more than 28% so far this year, outperforming the S&P 500 with less than 13% gains — has further buoyed confidence.
Global private equity firms are cautiously turning bullish on China after spending the past few years on the sidelines. Cheaper valuations and hopes that domestic consumer confidence could start recovering are drawing investors back to the world’s second-largest economy.
“In consumer-investing in China, you effectively have an opportunity to buy growth at a discount,” said Scott Chen, managing partner at global private equity firm L Catterton, citing the rapid rise of domestic brands and massive household savings.
