Questions Arise As Goldman Arranges For Tiny Asian IPOs In Hong Kong

This year, Goldman Sachs Group Inc. was hardly visible at the Hong Kong IPO scene.

Data published in the media shows that in March a $2.2 billion share sale of Guotai Junan Securities Co is the only activity that the Wall Street bank has undertaken as prat of its completed listing in the city this year. And even the much lesser known Shanghai Pudong Developmet Bank Co. and d Zhongtai International Securities Ltd were ahead of the Wall Street bank this year as it ranked 30th among Hong Kong IPO arrangers. Last year, Goldman was first.

And with the $64 million deal for the orthopedic device maker AK Medical Holdings Ltd., Goldman launched just its second Hong Kong listing this week. It was way back in 2000 that Goldman had arranged for a $40 million share sale on behalf of internet incubator Techpacific.com Ltd., and this week’s deal is the second lowest for Goldman Sachs since then.

With respect to moving up the league table at Hong Kong, not much help can be expected from AK Medical by Goldman as the company starts trading on Dec. 20. But there could be long standing profit for Goldman as it builds a relationship with a medical company that is bringing in new technology into a fast-growing segment of the Chinese healthcare market.

With a net income rise of 58 percent within a period of just two years till 2016, this Beijing-based company makes use of 3D printing technology for the production of joint replacements and spine implants.

Data also shows that with deal, Goldman is also set to make arrangement for the lowest volume of Hong Kong IPOs since 2008. The bank had then advised for $1.4 billion of first-time share sales. Hong Kong’s IPO market however is set to be its worst since 2012. Data also shows that driven by its work on block trades, Goldman ranked second among arrangers on Hong Kong equity deals and hence the bank is doing well in the equity business.

Also, this year, the Wall Street bank made arrangements for sale of some f the largest U.S. share for Chinese companies when it advised the $658 million IPO of search engine operator Sogou Inc and for the September listing of express delivery provider Best Inc.

“We have been very active in Hong Kong ECM this year, leading the market in follow-ons, including the largest of 2017,” a spokeswoman for Goldman said in an emailed statement. “We expect the IPO market to improve in 2018, a view reflected by our robust deal pipeline.”

(Adapted from Bloomberg)

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Categories: Economy & Finance, Strategy, Sustainability, Uncategorized

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