Busiest summer for IPOs in Asia with $ 56 billion in transactions in third quarter
Asia had its best third quarter on record for initial public offerings, even as Hong Kong calmed down as many companies suspended listing plans at the regional powerhouse amid China’s sweeping regulatory crackdown .
Thanks to successful deals in markets like South Korea and India, the region’s first share sales raised $ 56 billion in the three months to September 30, the highest ever recorded for such a period, according to data compiled by Bloomberg.
“Activity will continue – 2021 remains an extraordinary year for volume in equity capital markets,” said William Smiley, co-head of Asia ex-Japan equity markets at Goldman Sachs Group Inc. “Global investors still want access Asian growth. “
Asia’s record third quarter came despite the slowdown in Hong Kong, one of the busiest trading places in the world. As Beijing broadened its efforts to tame companies and align business models with President Xi Jinping’s “common prosperity” campaign, an estimated $ 1,000 billion was wiped out of the value of Chinese stocks around the world in July and l The Hong Kong equity benchmark dipped into a bear market in August.
This saw listing volumes in the financial hub drop to $ 6 billion in the third quarter, behind Korea for the first time in four years. It was also the lowest quarterly IPO volume for Hong Kong since early 2020, when the pandemic set in and equity capital markets came to a halt.
Equity performance also suffered. Companies that listed in Hong Kong in the third quarter and raised at least $ 100 million saw their shares rise 2.8% on average from their offer prices, according to data compiled by Bloomberg. This is up from 20% in South Korea and 25% in India, both of which saw a sharp increase in volumes compared to the first two quarters.
“After a very strong first half for the street, we continue to see good levels of activity for the remainder of this year, albeit at a slower pace,” said Magnus Andersson, co-head of capital markets at Asia-Pacific equities at Morgan Stanley. “We expect to have a healthy pipeline at the dawn of next year.”
Korea and India
The IPOs of game developer Krafton Inc. and online banking KakaoBank Corp. pushed third-quarter volumes to $ 10.4 billion in Korea, about four times what had been recovered in each of the previous two quarters.
Likewise, in India, food delivery start-up Zomato Ltd. raised $ 1.3 billion in July. Many more announcements are pending for the last quarter, starting with digital payments company Paytm, which has asked to raise up to 166 billion rupees ($ 2.2 billion) in what would be the largest introduction. on the country’s stock exchange.
“India now has a savvy and tech-educated population with good internet penetration,” said Anvita Arora, co-head of Asia-Pacific equity capital markets at Bank of America Corp. “The combination of technological success factors is there. In general, the technology pipeline is very strong. ”
China has headwinds
As Shanghai secured the biggest third-quarter deal in Asia with the bumper bid from China Telecom Corp., few bankers expect a large pipeline of Chinese listing candidates to return soon. This is due to continued uncertainty on the regulatory front and as issuers wait for new rules on overseas IPOs.
Chinese companies that initially considered listings in Hong Kong or the United States can now choose to raise funds privately instead while waiting for the clouds to clear.
Even with the slowdown in Hong Kong, early share sales in Asia have raised $ 140.5 billion so far in 2021, more than the same period another year, according to data compiled by Bloomberg.
And while IPOs of Chinese issuers may slow over the next three months, listed companies continue to raise funds.
London-based insurer Prudential Plc recovered $ 2.4 billion from a September sale of Hong Kong shares in one of the city’s biggest follow-up deals of the year.
The nature of deals in Asia will differ from 2020, and a more thoughtful approach to price, size and structure may be needed, but deals will continue to close, Goldman’s Smiley said.
This story was posted from an agency feed with no text editing.
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