China’s Onshore IPO Outlook Uncertain Amid Record-Low Fundraising in 2024

The outlook for onshore initial public offerings (IPOs) in China remains uncertain for 2025 following a significant decline in fundraising activity in 2024, marking a record low.

Chinese mainland stock markets raised an estimated 68 billion yuan ($9.32 billion) through 101 IPOs in 2024, according to Deloitte China. This represents a 68% drop in value compared to 2023 and is far below the December 2023 projection of 267 billion to 317 billion yuan by Deloitte.

The decline follows a series of policy-tightening measures introduced by the China Securities Regulatory Commission (CSRC) in March. These measures aimed to curb the listing of unprofitable companies and enhance the valuation of existing ones but have significantly slowed the pace of new listing applications.

Deloitte China refrained from providing projections for 2025, citing the high dependency of the market on regulatory policies.

Conversely, regulatory support for Hong Kong’s IPO market has fueled growth, particularly from large-cap stocks already listed in mainland China and companies under pressure from early private investors seeking exits.

Hong Kong IPOs in 2024 included notable listings such as Shenzhen-listed home appliance maker Midea Group, which raised HK$35.7 billion ($4.59 billion). Deloitte China ranked Hong Kong fourth globally for IPO activity, trailing India, Nasdaq, and the New York Stock Exchange.

KPMG predicts approximately 80 listings in Hong Kong for 2024, raising HK$100 billion to HK$120 billion. Deloitte China projects a higher range of HK$130 billion to HK$150 billion.

M&A activity, another critical exit route for investors, also dropped in 2024 but is expected to rebound in 2025 if the Chinese economy shows clearer recovery signs. Dealogic data indicates M&A volume in Greater China (mainland, Hong Kong, and Taiwan) fell 10% year-over-year to $297 billion through November 29, with full-year estimates at $325 billion — a 15% decline compared to 2023 and the lowest level in 15 years.

Samson Lo, co-head of M&A for Asia Pacific at UBS, forecasts a 15% rebound in 2025, driven largely by Chinese state investors. Cross-border deals face regulatory scrutiny in both Beijing and host countries, limiting international transactions. For instance, UBS sold an 85.01% stake in Credit Suisse Securities (China) to Beijing State-Owned Assets Management for $215.4 million in June 2024.

Participation by non-domestic investors in Chinese deals remains subdued due to concerns over abrupt policy shifts and capital repatriation. U.S. investor involvement is particularly low amid heightened U.S.-China tensions. According to a PitchBook report, U.S. investors face additional challenges compared to global peers, further diminishing their participation in China’s private market.

The evolving regulatory and geopolitical landscape will play a crucial role in shaping the trajectory of China’s IPO and M&A markets in the coming year.