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Business / Technology

Banks' revenue buoyed by Chinese tech floats

By EMMA DAI (China Daily) Updated: 2014-09-24 07:14

Chinese technology companies have become the largest sources of underwriting fees for global investment banks this year thanks to buoyant initial public offering activity, financial data provider Dealogic LLC said on Tuesday.

"China is the top fee-paying nation for global technology IPO revenues year-to-date with $614 million," the firm said in a release.

China alone accounted for 47 percent of the $1.3 billion in global investment banking fees from technology IPOs this year.

Banks' revenue buoyed by Chinese tech floats 

9 IPOs launched by Chinese companies in US this year 

Banks' revenue buoyed by Chinese tech floats

Alibaba makes its mark on Wall Street

Tech IPOs this year have been running at the highest level since 2000, and they have already exceeded the $508 million recorded for the whole year of 2013.

At the top of the dotcom bubble in 2000, investment banks garnered $2.76 billion from tech IPOs.

So far this year, the United States is second to China with $295 million of underwriting fees, or 23 percent of global technology firm IPO revenue. The United Kingdom ranks third with $113 million.

Among all Chinese technology firms making their debuts this year, Alibaba Group Holding Ltd's listing on Friday on the New York Stock Exchange is undoubtedly the deal of the year. With the over-allotment (green shoe) option exercised in full, at $25.03 billion, Alibaba's IPO is the world's largest by total deal value.

With a gross fee rate of 1.2 percent, the company was priced at $68 a share last Thursday. It is estimated to pay book-runners as much as $300.38 million.

Another high-profile Chinese tech IPO this year was that of JD.com Inc. On May 21, it listed on the Nasdaq at $19 per share. Although it raised only $2.05 billion, it reportedly generated up to $81.88 million for the investment banks that ran the issue. The gross fee rate was 4 percent.

Also noteworthy were the US listings of Jumei International Holding Ltd and Weibo Corp in May and April, respectively. The cosmetic group-buying website and the Chinese version of Twitter both paid banks 7 percent of deal value, or $42.56 million combined.

Year-to-date, global IPO revenue across all sectors totals $5 billion and accounts for 32 percent of total equity capital market revenue for investment banks, Dealogic said in a separate report last week.

Technology companies have accounted for 18 percent of global IPO revenue so far this year, up from 7 percent in the comparable period last year, Dealogic said.

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