Mainland firms cash in on Hong Kong IPOs

Hong Kong was the largest fundraising hub for mainland enterprises in the first 11 months of 2012, according to statistics from China Venture.

Its data showed that as many as 41 mainland enterprises were listed on the Hong Kong Stock Exchange's main board and raised 36.24 billion yuan ($5.81 billion) from January to November, 94 percent of the total amount raised by mainland enterprises during the same period.

The money mainland businesses raised in Hong Kong made up a large part of all capital raised through initial public offerings in the special administrative region. As many as 62 new listings brought in HK$89.4 billion ($11.53 billion) in 2012, according to a report by the professional services firm Deloitte Touche Tohmatsu Ltd.

Analysts said high borrowing costs, long waiting times and high fundraising standards in the Chinese mainland are the biggest reasons why domestic enterprises favor the overseas market.

The annual interest rate on money borrowed from banks is usually around 7 percent in the mainland, which is too high for many enterprises, especially small and medium-sized ones, said Ma Yaping, stock market analyst with Shanghai Jufeng Investment and Management Co Ltd. The rate can be as low as 2 percent in Hong Kong, Ma said.

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