New York (HedgeCo.NET) Late last Friday, securities regulators in China approved the IPOs for 20 companies and those IPOs will debut next week. The filings for the companies show that they only intend to raise around 200 million Yuan, but due to the fervor investors have for IPOs and the way the subscription process works, experts predict that the total capital locked up by the IPOs could reach as high as three trillion Yuan, or roughly $642 billion.

This is the second batch of IPOs approved by regulators within the last month as the government is attempting get the IPO market to cool off. While the intentions may be to cool the IPO market, there could be a negative impact to releasing the IPOs as such a rapid rate as the money being invested in them is money that won’t be invested in to the secondary market.
The fervor surrounding the IPO market in China is a little reminiscent of the United States tech IPO market in the late 90s. Fundamentals and productivity were of little concern, the only thing that mattered was getting in on the action because of the potential for huge gains.

With so many hedge funds looking to improve returns after lagging the overall market the last few years, you can bet that there are a number of funds looking to cash in on the boom in IPOs in China.