Zurich soars up European IPO rankings with jolt of Chinese money

ZURICH has raced towards the top of the rankings for European listing venues this year, overtaking the likes of London and Amsterdam. And it has Chinese share sales to thank.

About US$2.7 billion has been raised via listings in Switzerland this year, putting the country second only to Germany, according to data compiled by Bloomberg.

All but one of those deals were stock offerings by Chinese companies such as battery makers GEM and Gotion High-Tech, which have been turning to European markets amid escalating tensions with the US. Zurich is particularly attractive as Switzerland is perceived as being politically neutral, giving China-listed firms access to a fresh pool of capital at a time when global share sales are faltering.

The listings have also been hastened by this year’s widening of the Shanghai-London Stock Connect system that makes cross-border deals easier for firms that are already traded in mainland China. In addition to linking the UK capital with the Chinese financial centre, it now includes Shenzhen, Switzerland and Germany.

Frankfurt has yet to draw a single listing of global depositary receipts since the expansion of the program, and only topped Zurich due to sports-car maker Porsche’s landmark 9.4 billion euros (S$13.5 billion) IPO, Europe’s largest in over a decade.

Despite their rising prevalence, Chinese listings in Switzerland have been panned in some quarters for failing to draw European investors, or even Western banks at scale, with most firms relying on advisers and shareholders from back home.

“Chinese banks are essentially pitching these listings as arbitrage opportunities where they sell new stock listings in Zurich back to shareholders in China at a discount,” said Andreas Bernstorff, who heads equity capital markets at BNP Paribas.

“Until Western banks get involved and the deals start getting marketed to local investors at large, these listings will have no real impact on European capital markets,” Bernstorff said, adding that larger, more liquid offerings will come to market.

Chinese solar power equipment maker Longi Green Energy Technology is set to sell GDRs in Zurich as soon as the first half of next year in what would be the biggest Swiss offering by a Chinese firm since the country’s regulators started encouraging its companies to consider selling shares there, Bloomberg News reported in November.

And as larger deals come on tap, more Western institutions will get involved, bankers say.

“The market has so far been dominated by smaller deals, which is why you have seen Chinese banks dominate bookrunning,” said Mandy Zhu, head of China, global banking at UBS Group. “As larger GDR deals come to market, we intend to execute more transactions.” BLOOMBERG