The number of Chinese IPOs in the U.S. and Hong Kong is predicted to rise in the upcoming year, according to analysts.

• According to Marcia Ellis, global co-chair of private equity practice at Morrison Foerster, Chinese companies are increasingly looking to get listed in Hong Kong or New York as they face challenges in listing in Mainland China and pressure from shareholders to quickly achieve an exit.
• Since the Didi IPO in the summer of 2021, few large China-based companies have listed in New York due to increased scrutiny by U.S. and Chinese regulators on such listings.
• According to Reuben Lai, vice president, private capital, Greater China at Preqin, many Chinese companies that list in Hong Kong view it as a means to gauge investors' interest in an IPO in another country.

The number of Chinese IPOs in the U.S. and Hong Kong is predicted to rise next year, according to analysts, due to the success of several high-profile listings outside of China this year.

Both Pony.ai and the Chinese autonomous driving company have recently filed for a Nasdaq listing, with shares in the autonomous driving company rising nearly 6.8% on Friday.

Since the Didi IPO in the summer of 2021, few large China-based companies have listed in New York due to increased scrutiny by U.S. and Chinese regulators on such listings. As a result, Didi, a Chinese ride-hailing company, was forced to temporarily suspend new user registrations and was delisted in less than a year.

Since the process for a China-based company to go public in New York has been clarified by both U.S. and Chinese authorities, geopolitics and market changes have significantly decreased the number of U.S. IPOs involving Chinese businesses.

In 2025, the IPO market is predicted to recover after a few sluggish years, thanks to lower interest rates and, to some extent, the end of the U.S. presidential election, according to Marcia Ellis, Hong Kong-based global co-chair of private equity practice at Morrison Foerster.

Despite the perception of regulatory problems between the U.S. and China, most of the issues causing this perception have been resolved.

"Due to challenges in obtaining listings in Mainland China and pressure from investors to quickly secure an exit, Chinese companies are increasingly considering listing in Hong Kong or New York."

As of Sept. 30, 96 IPO applications were pending listing or under processing on the Hong Kong Stock Exchange, while 42 companies had already gone public that year.

A Chinese artificial intelligence and auto chip developer and a state-owned bottled water company went public in Hong Kong last week.

Two of the largest IPOs of the year, excluding listings of companies that also trade in the mainland, were the exchange's largest IPOs, according to Renaissance Capital, which tracks global IPOs. The firm noted that Chinese delivery giant SF Express is planning for a Hong Kong IPO next month, while Chinese automaker Chery aims for one next year.

EY's global IPO leader, George Chan, stated in an interview with CNBC earlier this month that the overall pace of Hong Kong IPOs this year is slightly slower than anticipated.

Chan stated that the fourth quarter is typically not a favorable time for listings and predicted that most companies would delay their IPOs until at least February. In his discussions with early-stage investors, Chan noted that they were optimistic about the upcoming year and were preparing companies for IPOs.

He stated that the planned listings are typically in the life sciences, tech, or consumer sectors.

Hong Kong, then New York

The Hang Seng Index has surged over 20% so far this year, thanks to high-level stimulus announcements and lower interest rates that make stocks more attractive than bonds.

Preqin's Reuben Lai stated that many Chinese companies that list in Hong Kong view it as a way to gauge investors' interest in an IPO in another country.

"According to Ellis, geopolitical tensions make Hong Kong a popular market, but the extensive capital markets in the US are still a preferred choice for many companies, especially those in advanced technology and not yet profitable, who believe their equity stories will be better received by US investors."

Since 2023, over half of IPOs on U.S. exchanges have originated from foreign-based companies, marking a 20-year high, according to EY.

Two Chinese electric car companies, backed by Geely and owned by Chinese entities, were listed in the U.S. this year, according to EY's major cross-border IPOs list.

Windrose, a Chinese electric truck manufacturer, announced on Sunday that it plans to list in the U.S. in the first half of 2025 and later in Europe in the second half of the same year. The company aims to deliver 10,000 trucks by 2027 and has moved its global headquarters to Belgium.

The dearth of IPOs in the U.S. and Hong Kong has diminished the motivation for funds to invest in startups.

Preqin's Lai stated that investors are now looking at China again, with a greater potential for money coming back, valuation of companies, exit environment, and performance of funds.

Lai stated that although investor activity has not yet reached the levels of the previous two years, there are some investments in consumer products such as milk tea and supermarkets as part of the nascent recovery.