Hong Kong IPOs lift global cross-border listing activity

Singapore

MONEY raised from global cross-border initial public offerings (IPO) - companies not listing on their domestic exchange - fell 24 per cent to US$20.6 billion in the first half of 2015 compared to a year ago.

But within this segment, Asia-Pacific was a bright spot due primarily to China companies listing in Hong Kong. Some US$15.6 billion of capital was raised by 23 cross-border IPOs in the region in the first half of 2015, up 75 per cent from a year ago.

The numbers were boosted by two China brokers, Huatai Securities and GF Securities, which raised a total of US$9.1 billion on the Hong Kong Stock Exchange.

The statistics were compiled in a report by law firm Baker & McKenzie.

Ashok Lalwani, chair of the firm's Asia- Pacific capital markets practice group, said he expects some near-term volatility. "But we are optimistic for the long term, as exchanges in the region seek to promote stronger market environments," he said.

"This should create stronger hubs for investment, particularly for emerging Chinese, Southeast Asian and Indian companies."

Nearly all the capital raised in Asia-Pacific cross-border IPOs in the first half came from China companies listing in Hong Kong.

Other notable listings in Hong Kong included Legend Holdings, a conglomerate that is the largest shareholder of computer company Lenovo; windshield maker Fuyao Glass Industry Group; and furniture retailer Red Star Macalline Group.

In North America, issuers raised only US$2.2 billion from 23 cross-border IPOs in the first half, down from US$8.4 billion a year ago.

The Nasdaq board took the lion's share of listings. Healthcare companies were the most popular. For example, Belgium- based pharmaceuticals company Galapagos NV raised US$242 million.

IPOs declined in North America due to companies being cash-rich and not needing to raise capital. Meanwhile, private equity and venture capital funds also invested in attractive private companies, keeping them off public markets, Baker & McKenzie said.

Another possible reason was how Asia-Pacific exchanges have upped their game to attract companies after China Internet giant Alibaba's US$25 billion offering in the second half last year on the New York Stock Exchange, the report said.

Amar Budarapu, chair of the North America corporate and securities practice group, said he expects windows of opportunity for IPOs later in 2015 given that the US economy seems to have recovered from its winter weakness.

Elsewhere, cross-border IPOs in Europe, the Middle East and Africa declined compared to the same period a year ago. In the region, some US$2.8 billion was raised by issuers through 19 listings. Most listings were made on the London Stock Exchange.

IPO activity there was characteristic of a mature cycle with industrials leading activity, the report said. The largest cross-border listing was Irish homebuilder Cairn Homes on the London bourse, which raised US$498 million.