09-12-2010, 07:44 AM
Business Times - 09 Dec 2010
IPO fever expected to keep raging next year
Industry sources say the pipeline is healthy and some big listings are on the cards
By LYNETTE KHOO
(SINGAPORE) This year's great IPO revival is expected to carry its momentum into 2011 with more new listings streaming in.
Professionals linked with initial public offerings (IPOs) say that after a seasonally slow December, many companies are raring to go to the market next year.
But the big question is whether 2011 will match up to 2010 in terms of funds raised, as this year has seen some blockbuster offerings, including Singapore's second-largest IPO from Global Logistic Properties.
David Hoon, director for corporate clients solutions at CIMB Bank Berhad, said that judging from the inquiries received, there are many companies still keen on tapping public funds.
This interest is coming from companies in China, South-east Asia, and even Russia. Some companies are also interested in undertaking inbound dual listings on the Singapore Exchange (SGX), he said.
George Lee, head of group investment banking at OCBC, noted that there are a few real estate investment trusts (Reits) in the IPO pipeline.
One highly anticipated IPO is the commercial Reit from Mapletree Investments early next year, which is expected to raise at least $500 million. This follows its industrial Reit launched in a $1.19 billion IPO in October.
JPMorgan also told reporters this week that more than a dozen IPOs are expected to be launched here in the coming months, raising at least US$300 million to US$400 million each, with billion-dollar listings from a Singapore company and a non-Southeast Asian company.
Despite a slow start this year, 2010 still turned out to be a stronger year than 2009, thanks to a spate of deals in recent months. A total of $6.38 billion of funds were raised from 31 listings, compared to $3.21 billion from 23 listings last year, SGX data shows.
This is in line with global trends. According to data provider Dealogic, 1,241 IPOs raised a total of US$253.87 billion in the past 11 months, bolstered by the world's largest IPO from Agricultural Bank of China's US$22.1 billion offering. This compares to 597 IPOs that raised US$114.84 billion for the whole of 2009.
Ernst & Young said that by year-end, the total global IPO values will exceed the previous record of US$295 billion raised at the peak of 2007.
More than half of these funds are coming from Asia, where issuers have outstripped the US$98.2 billion of funds raised in the peak of 2006 with a total of US$164.5 billion being raised so far this year.
But market condition is still the wild card determining whether the pipeline will translate into real deals. Korean tensions and the European debt crisis recently saw some IPOs fall below their offer prices.
Some IPO professionals say that the recent dismal performance of IPOs has hurt the listing aspirations of some companies here.
Robson Lee, an equity partner at Shook Lin & Bok LLP, said two clients decided to pull back upon seeing recent IPOs slipping below their offer prices.
IPO markets elsewhere have also been spooked. Faltering stock prices in Hong Kong prompted Bluestar Adisseo Nutrition Group and China Datang Corp's renewable energy unit to delay or withdraw their share sales.
If upcoming IPO deals materialise and perform well, that will 'set the tone for the overall market', said Goh Chyan Pit, DBS managing director of equity capital markets and global financial markets.
Hopefully, there will be good news for the market next year, Mr Lee of Shook Lin & Bok added, pointing to pre-election Budget goodies here, easing tensions in the Korean peninsula and a stabilisation of Europe's debt problem.
He noted that should the proposed merger between SGX and Australia Stock Exchange (ASX) go through, it will also provide a major uplift for the Singapore market. For one thing, this will open the door for resource and mining companies in Australia to consider Singapore as a potential listing venue.
Over 700 companies are currently listed on SGX and this number could cross 1,000 if companies on SGX and ASX are allowed to cross-list, he said. But before this can happen, one area that requires a closer look is how both exchanges could ensure consistency in listing rules and regulation.
In addition, SGX has to grapple with the pronounced trend of companies seeking to delist, particularly S-chips or Chinese firms listed here. This has stoked concerns over a potential hallowing out of undervalued companies.
Some 14 privatisations have taken place this year, the latest involving S-chip Reyoung Pharmaceutical Holdings, while Financial One, the only Taiwanese financial firm listed on SGX, is mulling over a delisting.
Bankers note that low valuations have also made it easier for controlling shareholders to take their companies private.
'As long as you have companies that are not trading well and attracting attention, there will always be opportunities for delistings to take place,' Mr Goh said.
On a brighter note, Mr Hoon said that with valuations between the Singapore and Hong Kong markets seen narrowing, as reflected among S-chips in the shipbuilding space versus their Hong Kong-listed peers, the commercial interest for a delisting or dual listing is diminishing.
IPO fever expected to keep raging next year
Industry sources say the pipeline is healthy and some big listings are on the cards
By LYNETTE KHOO
(SINGAPORE) This year's great IPO revival is expected to carry its momentum into 2011 with more new listings streaming in.
Professionals linked with initial public offerings (IPOs) say that after a seasonally slow December, many companies are raring to go to the market next year.
But the big question is whether 2011 will match up to 2010 in terms of funds raised, as this year has seen some blockbuster offerings, including Singapore's second-largest IPO from Global Logistic Properties.
David Hoon, director for corporate clients solutions at CIMB Bank Berhad, said that judging from the inquiries received, there are many companies still keen on tapping public funds.
This interest is coming from companies in China, South-east Asia, and even Russia. Some companies are also interested in undertaking inbound dual listings on the Singapore Exchange (SGX), he said.
George Lee, head of group investment banking at OCBC, noted that there are a few real estate investment trusts (Reits) in the IPO pipeline.
One highly anticipated IPO is the commercial Reit from Mapletree Investments early next year, which is expected to raise at least $500 million. This follows its industrial Reit launched in a $1.19 billion IPO in October.
JPMorgan also told reporters this week that more than a dozen IPOs are expected to be launched here in the coming months, raising at least US$300 million to US$400 million each, with billion-dollar listings from a Singapore company and a non-Southeast Asian company.
Despite a slow start this year, 2010 still turned out to be a stronger year than 2009, thanks to a spate of deals in recent months. A total of $6.38 billion of funds were raised from 31 listings, compared to $3.21 billion from 23 listings last year, SGX data shows.
This is in line with global trends. According to data provider Dealogic, 1,241 IPOs raised a total of US$253.87 billion in the past 11 months, bolstered by the world's largest IPO from Agricultural Bank of China's US$22.1 billion offering. This compares to 597 IPOs that raised US$114.84 billion for the whole of 2009.
Ernst & Young said that by year-end, the total global IPO values will exceed the previous record of US$295 billion raised at the peak of 2007.
More than half of these funds are coming from Asia, where issuers have outstripped the US$98.2 billion of funds raised in the peak of 2006 with a total of US$164.5 billion being raised so far this year.
But market condition is still the wild card determining whether the pipeline will translate into real deals. Korean tensions and the European debt crisis recently saw some IPOs fall below their offer prices.
Some IPO professionals say that the recent dismal performance of IPOs has hurt the listing aspirations of some companies here.
Robson Lee, an equity partner at Shook Lin & Bok LLP, said two clients decided to pull back upon seeing recent IPOs slipping below their offer prices.
IPO markets elsewhere have also been spooked. Faltering stock prices in Hong Kong prompted Bluestar Adisseo Nutrition Group and China Datang Corp's renewable energy unit to delay or withdraw their share sales.
If upcoming IPO deals materialise and perform well, that will 'set the tone for the overall market', said Goh Chyan Pit, DBS managing director of equity capital markets and global financial markets.
Hopefully, there will be good news for the market next year, Mr Lee of Shook Lin & Bok added, pointing to pre-election Budget goodies here, easing tensions in the Korean peninsula and a stabilisation of Europe's debt problem.
He noted that should the proposed merger between SGX and Australia Stock Exchange (ASX) go through, it will also provide a major uplift for the Singapore market. For one thing, this will open the door for resource and mining companies in Australia to consider Singapore as a potential listing venue.
Over 700 companies are currently listed on SGX and this number could cross 1,000 if companies on SGX and ASX are allowed to cross-list, he said. But before this can happen, one area that requires a closer look is how both exchanges could ensure consistency in listing rules and regulation.
In addition, SGX has to grapple with the pronounced trend of companies seeking to delist, particularly S-chips or Chinese firms listed here. This has stoked concerns over a potential hallowing out of undervalued companies.
Some 14 privatisations have taken place this year, the latest involving S-chip Reyoung Pharmaceutical Holdings, while Financial One, the only Taiwanese financial firm listed on SGX, is mulling over a delisting.
Bankers note that low valuations have also made it easier for controlling shareholders to take their companies private.
'As long as you have companies that are not trading well and attracting attention, there will always be opportunities for delistings to take place,' Mr Goh said.
On a brighter note, Mr Hoon said that with valuations between the Singapore and Hong Kong markets seen narrowing, as reflected among S-chips in the shipbuilding space versus their Hong Kong-listed peers, the commercial interest for a delisting or dual listing is diminishing.