Greater China issuers rank second by number of IPO deals, behind US, in Q2 2013
Beijing, Shanghai, Hong Kong and Taipei, 27 June 2013 – Global IPO activity steadied in Q2 2013, with 151 deals and IPO proceeds of around US$33.9 billion, according to Ernst Young’s Global IPO update. By domicile, issuers from the US, Greater China and the UK led by number of deals, with 39, 13 and 10 deals, respectively.
Based on the Q2 2013 totals, Global IPO activity is up 40% in terms of deal value and decrease by 3% in terms of deal number, compared to Q1 2013 (156 IPOs raising US$24.3b). For the first half (1H) of 2013, around 307 IPO listings raising US$58.2b (6% drop) compared to US$61.8b in 2012 but a 31% drop (446 deals) by deal number, compared to same period in 2012.
Terence Ho, Ernst & Young’s Greater China Strategic Growth Markets Leader, comments: “In spite of a standstill in IPO activity in Mainland China due to regulatory factors, Mainland China and Hong Kong exchanges raised US$4.0b through 10 deals, accounting for approximately 40% of capital raised in the Asian region in Q2 2013. However, we expect a stronger second half in the Mainland China and Hong Kong region with the IPO window anticipated to re-open in Mainland China, and more IPO activities in the second half, especially the last four months, in Hong Kong. “
Greater China IPO activity
In the first half of 2013, the Hong Kong Stock Exchange (HKEx) raises US$5 billion (HK$39 billion) over 21 deals1, and is estimated to rank fourth2 globally by capital raised. A-share IPO in Mainland China is suspended since November 2012, therefore, there is no A-share IPO in the first half of 2013.
Hoffman Cheong, Assurance Leader China North (effective 1 July 2013), says: “Hong Kong has recorded a 26% increase in capital raised in 1H2013 as compared to same period last year, despite the number of deals has dropped over the same period as last year. The stronger IPO market in 1H2013 is due to stronger investor confidence, better economic fundamentals and supportive global monetary conditions. Recent market volatility has delayed some IPOs, but historically there were IPO windows in the last four months of a year in Hong Kong, and we expect this trend to continue. Companies need to prepare earlier and be ready to move fast once a viable market window opens.”
Greater China outlook
Terence Ho concludes, “We are continuously optimistic about the Greater China IPO activity in second half of this year. We expect A-share IPO in Mainland China to re-open in the second half, which will mostly be driven by small-caps, and Chinese enterprises to resume US listing and a stronger IPO market in Hong Kong in the last four months. But pricing will be key – 91% of investors are concerned about attractive pricing – this is a top critical success factor influencing IPO success."
Asia recovering slowly
Deal activity in Asia continues to be impacted by the closure of Mainland Chinese exchanges to new listings since November 2012. This resulted in no new IPO activity on Mainland China exchanges in the first half of 2013. However, there was a total of 44 deals across Asia in Q2 2013 raising US$10.5b – accounting for 31% of global funds raised.
Comparing the first half of 2013 (111 deals which raised US$16b) with the same period last year (209 deals, US$23.7b), the amount of capital raised decreased by 33% and deal numbers by 47%. Asian deals featured prominently in Q2 2013 top 10, accounting for 5 of the deals. The largest was the listing of BTS Rail Mass Transit Growth Infrastructure Fund in Thailand in April for US$2.1b, followed by Sinopec Engineering, which listed for US$1.8b in Hong Kong – priced at the bottom of its expected range. With proceeds of US$1.1b, China Galaxy also priced at the bottom of its range. The resurgence of the Japanese market was underlined by the flotation of Nomura Real Estate Master Fund Inc for US$1.7b on the Tokyo Stock Exchange.
US market performing strongly
In Q2 2013, US stock exchanges raised US$12b from 48 IPOs, accounting for 32% globally in terms of number of deals and 35% by capital raised. Capital raised was up nearly 40% compared to Q1 2013 (32 deals, US$8.6b). Q2 2013 was 65% higher than Q2 2012 (33 deals, US$23.2b) by capital raised if we exclude the Facebook listing. By deal volume, Q2 2013 saw 50% increase compared to Q1 2013 and 45% higher for Q2 2012. In 1H 2013, the amount of capital raised was down 31% compared to 1H 2012, but deal volume was up 8%.
Notes to editors
Data sourced from Dealogic. Covers global IPO activity from 1 January to 17 June 2013 unless with the special notes.
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1 Source: HKEx, up to 26 June
2 Based on information up to 22 June and an estimation of IPO activities for the rest of the period