Asia ECM volumes regain ground
Equities league tables Capital raisings expected to pick up in second halfBY FIONA LAU, S ANURADHA,
CANDY CHANAsian equity issuance rebounded
in the second quarter, but a lack
of jumbo IPOs from China left
first-half volumes still 22% down
on last year’s total.
Equity and equity-linked deals
in Asia Pacific, excluding Japan,
totalled US$53.3bn in the three
months to June, up 9% from a
weak first quarter and only 0.8%
shy of the same period last year,
according to Refinitiv data.
First-half underwriting
volumes, however, remain
well short of last year’s pace at
US$103bn, down from a three-
year high of US$132bn in 2018.
Goldman Sachs leads the 2019
league table having managed
deals totalling US$8.4bn,
followed by Citic (US$7.9bn) and
Morgan Stanley (US$7.3bn).
The main factor behind the
drop in activity in the first
half was the absence of sizable
Chinese IPOs such as the
Rmb27.12bn (then US$4.25bn)
Foxconn Industrial Internet IPO
in June 2018. Issuers from China,
led by technology companies,
accounted for US$66.6bn or 65%
of deals but this included only
US$17bn from IPOs, down 38%
year on year.
The constant backdrop of US-
China trade tensions dampened
activity and only three Chinese
companies completed US$1bn-
plus IPOs: Ningxia Baofeng
Energy in Shanghai and
Shenwan Hongyuan and Hansoh
Pharmaceutical in Hong Kong.
Equity issuance in Hong Kong,
however, is expected to pick up
strongly in the second half.
Budweiser Brewing Company
APAC, the Asia-Pacific business
of Anheuser-Busch InBev,
has launched an IPO of up to
HK$76.6bn (US$9.8bn), the
world’s largest so far this year.
Chinese e-commerce giant
Alibaba Group Holding is
planning a US$10bn–$15bn
secondary listing while
Topsports, the sportswear unitof Belle International, data
centre operator Global Switch,
Czech consumer finance
company Home Credit Group
and Chinese baby formula
maker Feihe all plan IPOs of at
least US$1bn each.
“For the second half of the
year, most of the (Chinese) IPOs
will take place in Hong Kong.
I don’t think it’s a shift. It’s a
reflection of a particular client’s
needs,” said James Wang, co-
head of equity capital markets
for Asia ex-Japan at Goldman
Sachs.
The launch of the Shanghai
tech board is also giving
Chinese issuers more options
to raise capital. As of July 2, 141
companies had applied to list
on the board with a combined
fundraising target of Rmb129bn.
“I don’t anticipate a shift from
Hong Kong to the Shanghai tech
board. The tech board will give
domestic Chinese companies
the choice to list earlier and
faster versus the main board,”
said Wang.INDIA UP, SE ASIA DOWN
Outside China, India was the
most active market with share
sales totalling US$13.2bn in
the first half of 2019 versus
US$11.7bn in 2018.
The around US$3.6bn each
rights offer in Vodafone Ideaand Bharti Airtel in May boosted
volume.
Morgan Stanley led the
league table ahead of Bank of
America Merrill Lynch.
IPO activity was muted in the
second quarter as the market
awaited the outcome of the
federal elections in May. The
first IPO after the election was
IndiaMart InterMesh’s Rs4.8bn
(US$70m) issue in end June.
Follow-on offerings and
secondary sell-downs, however,
kept bankers busy. The
significant deals in the second
quarter were the Godrej
Properties qualified institutional
placement (Rs21bn), HDFC Life
Insurance offer for sale (Rs25bn),
SBI Life Insurance OFS (Rs17bn)
and overnight block in Gruh
Finance (Rs9bn).
Australia registered volumes
of around US$12.1bn in the first
half, down 27% year on year. UBS
topped the league table, followed
by Citigroup.
Most of the deals were driven
by mergers and acquisitions
particularly in the property
sector, which accounted for
about 40% of equity issuance
so far this year, according to
Richard Sleijpen, UBS’s co-head
of equity capital markets for
Australasia.
REITs have been especially
prolific issuers. Dexus completedthe largest equity raising with a
A$900m (US$632m) placement.
IPOs were a more muted affair,
with online lender Prospa’s
A$110m listing the largest IPO
year to date.
“In 2018, we saw a few large
IPOs such as Viva Energy and
Coronado. This year will be
different with IPO sizes much
smaller than last year, but there
will be more IPOs by number
this year,” said Sleijpen.
In South-East Asia, only
Malaysia registered a busier first
half than last year, with ECM
volume rising to US$2bn from
US$1.2bn in the first half of
2018.
Elections weighed heavily
on activity in Indonesia and
Thailand. Indonesian equity
issuance totalled just US$591m,
down from US$1.5bn in the
same period of 2018, and
the Thai market slumped to
US$687m from US$3.2bn last
year.
Philippines volumes tumbled
to US$855m from US$3.2bn
in 2018, and Vietnam failed to
repeat last year’s record listings,
with deal flow hitting just
US$326m, compared to US$2.5bn
in 2018.
Singapore stayed busy, with a
first-half tally of US$3.1bn down
only marginally on US$3.3bn in
the same period last year. League tables
Top bookrunners of global common
stock Asia Pacific (ex-Japan)
1/1/19 – 30/6/
Amount
Name Issues US$(m) %
1 Morgan Stanley 41 6,630.5 9.
2 Goldman Sachs 25 5,120.6 7.
3 UBS 35 4,586.9 6.
4 Citic 25 3,692.3 5.
5 Citigroup 35 3,569.0 5.
6 JP Morgan 26 3,437.8 4.
7 CICC 30 3,294.7 4.
8 Credit Suisse 28 2,387.5 3.
9 HSBC 14 2,229.3 3.
10 BAML 10 2,194.2 3.
Total 870 71,507.
Market volume
Proportional credit
Source: Refinitiv data SDC Code: C4aTop bookrunners of global convertible
offering Asia Pacific (ex-Japan)
1/1/19 – 30/6/
Amount
Name Issues US$(m) %
1 Citic 10 4,226.3 12.
2 Goldman Sachs 7 3,300.1 9.
3 China Sec 8 2,549.4 7.
4 Bank of China 4 2,442.7 7.
5 CICC 3 2,220.1 6.
6 Huatai Sec 4 1,571.3 4.
7 Credit Suisse 9 1,419.1 4.
8 UBS 5 1,401.4 4.
9 Citigroup 7 1,352.7 4.
10 Ping An Sec 2 1,137.5 3.
Total 98 33,588.
*Market volume
Proportional credit
Source: Refinitiv data SDC Code: C9bGlobal Equity and Equity-related
Asia Pacific incl Australasia, ex Japan
1/1/19 – 30/6/
Amount
Name Issues US$(m) %
1 Goldman Sachs 32 8,420.7 8.
2 Citic 35 7,918.6 7.
3 Morgan Stanley 47 7,329.7 7.
4 UBS 38 5,669.6 5.
5 CICC 33 5,514.8 5.
6 JP Morgan 30 4,448.3 4.
7 Citigroup 41 4,226.0 4.
8 China Sec 28 3,839.7 3.
9 Credit Suisse 35 3,716.9 3.
10 BAML 14 2,908.4 2.
Total 810 102,930.Source: Refinitiv data