Non-Bank Financials - China (H/A): Pre-IPO investment landscape and sector impact

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Non-Bank Financials - China (H/A): Pre-IPO investment landscape and sector impact

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Non-Bank Financials - China (H/A)

Pre-IPO investment landscape and sector

impact

Industry Overview

A strong year for pre-IPO investors 20 May 2026

Financial institutions invest in start-ups via their subsidiaries, like asset/investment Equity

management companies, PEs, and SPV funds, and the listing of start-ups usually enables China

early investors to book pre-IPO investment fair value gains and realize the gains post Non-Bank Financials

lock-up period. It is usually seen that in the years when tech IPOs boom, market offers Michael Li >>

premium in IPO pricing and post-IPO stock performance tends to be strong. We believe Research Analyst

this year could see the listing of some of the bigger Chinese start-ups in the ChiNext Merrill+852 3508Lynch7381(Hong Kong)

Board/STAR Market based on the current IPO pipeline. The IPO fund raising size YTD m.li@bofa.com

amounted to RMB44bn, up by 68% YoY and we expect it to further accelerate in 2H26. Susie Liu, CFA >>

Research Analyst

Earnings impact: brokers>insurers>banks Merrill+852 3508Lynch8456(Hong Kong)

There are two reasons that we think brokers can benefit more than insurers/banks. First, susie.liu@bofa.com

broker PEs usually have the opportunities to invest in start-ups at earlier stages with

lower cost. STAR Market co-investment is required for sponsors – benefiting those with SPV: Special Purpose Vehicle

strong IBDs. Brokers may also have better insight into underlying assets as they are

deeply involved since the early stages. Secondly, brokers are much smaller in relation to IBD: Investment Banking Division

earnings bases compared to insurers/banks, leading to higher sensitivity to investment

gain changes.