After three lean years, Hong Kong bankers are looking forward to a surge in fees in 2014 as the city regains its swagger with a slew of big-money initial public offerings.
With the value of IPOs in Hong Kong seen doubling to over $32 billion this year as major economies pick up steam, Greater China could account for more than half of all 2014 investment banking fees for the Asia-Pacific region, excluding Japan.
An upsurge in debt offerings and a cautious restart for IPOs in mainland China will also fuel a rise in first-half revenue at investment banks. Since 2009 and 2010, when a bumper crop of deals helped Hong Kong overtake New York as the world's biggest IPO market, banks have seen equity issuance and fees shrivel.
Tycoon Li Ka-shing's Power Assets Holdings is leading the pack of 2014's mega-deals with the planned sale of up to $3.6 billion of shares in an electricity business later this month. Handling the sale and booking most fees from it will be Goldman Sachs and HSBC.
While last year was depressed in terms of IPOs, Greater China still accounted for 49 percent of Asia-Pacific ex-Japan investment banking fees, according to Thomson Reuters/Freeman Consulting estimates. About 36 percent of the $9.86 billion in fees came from equity deals, the data show.
Advisory firm PwC estimates Hong Kong IPOs could raise $32.2 billion in 2014, the highest since 2010 and nearly double the 2013 tally of $17.1 billion. That would make 2014 the fourth-biggest year on record for new listings in the city, Thomson Reuters data show.
With economic activity improving in the United States, Japan and some countries in Europe, risk appetite and demand for new listings is expected to grow in 2014, benefiting Hong Kong and China listings, analysts said.
"Sentiment will be good for IPOs this year," said Jasper Chan, corporate finance officer at brokerage Phillip Securities, which provides margin loans to retail investors looking to buy into IPOs. "You can see from the margin amounts, how deals are oversubscribed sometimes more than 1,000 times. You can see how hot the IPO market is now."