Out of the top 10 international firms that advised on the 82 Hong Kong Stock Exchange IPOs filed last year and completed by March 2022, only two were U.K.-based firms—a sign that British firms are losing the fight for a share of the Hong Kong initial public offerings market—a market they once dominated.
U.S. firms fared a lot better, but even they face stiff competition for Hong Kong IPOs: An analysis by Law.com International has found that Chinese firms are taking the lion’s share of the work.
The Chinese law firms Commerce & Finance and Jingtian & Gongcheng were the most active, with Commerce & Finance advising 12 issuers and representing underwriters in at least 17 other listing transactions.
Beijing-based Jingtian & Gongcheng advised on 20 IPOs, representing issuers on seven of those transactions. The firm acted on the listings of SCE Intelligent Commercial Management and NetEase-backed music streaming site Cloud Village, which raised $225 million and $422 million, respectively.
Tian Yuan followed with 18 total deals, eight of those acting for issuers. King & Wood Mallesons came after Tian Yuan with 16 deals, with an equal number of representations for issuers and underwriters.
One of King & Wood’s most significant Hong Kong IPO advice last year was for Chinese bank Dongguan Rural Commercial Bank on its $1.3 billion debut.
Han Kun Law Offices acted on 11 deals including that of JD Logistics’ massive $3.2 billion debut.
The International Players
Law.com International’s analysis also demonstrates that listing on the Hong Kong Exchange was not easy. The stringent prerequisites for listing in Hong Kong weighed heavily but the general market volatility also played a significant part. Records show that 362 initial public offering applications were filed with the Hong Kong Stock Exchange last year, but of those, 220 lapsed while 60 are still active. This means that to date, only 82 applicants that filed last year have successfully listed.
In the competition to advise on those 82 IPOs, the only two British law firms that made the top 10 were Clifford Chance and Herbert Smith Freehills.
Clifford Chance advised on 14, mostly for issuers, and Herbert Smith Freehills advised on 11, mostly for underwriters. Both firms advised on the $276 million IPO of SF Intra-city Industrial Co. Ltd., one of China’s largest on-demand delivery services platforms, in September.
Among U.S. firms, Davis Polk & Wardwell advised on 14 listings last year. Skadden, Arps, Slate, Meagher & Flom tied with Herbert Smith with 11 deals, though it focused on acting for issuers rather than underwriters.
The real game-changer for U.S. firms has been the focus on the biotech, pharmaceuticals, health care, and technology sectors. Firms such as Sidley Austin, O’Melveny & Myers and Wilson Sonsini Goodrich & Rosati, which have particular expertise in these areas, were able to leverage that expertise for IPO work. Sidley Austin advised 10 issuers on their successful listings last year, O’Melveny & Myers, advised on eight listings, and Wilson Sonsini advised on six.
O’Melveny & Myers, Wilson Sonsini, and Davis Polk advised on the $192 million Hong Kong IPO of hair care health specialist Yonghe Medical Group Co. Ltd in December.
Kirkland & Ellis and Sullivan & Cromwell acted on five deals each; both are heavier on representing underwriters. One of Sullivan & Cromwell’s key transactions was Xpeng Inc.’s $1.8 billion Hong Kong debut.
At the bottom end of the table, other U.K.-based firms that advised on listings were Linklaters, which acted on three successful listings last year, while Allen & Overy advised on one— both acting only for underwriters.
For offshore firms, Maples and Calder and Conyers Dill & Pearman swept the market with at least 19 and 15 deals respectively, leaving competitor Harneys behind with six transactions.