But main wave of offerings could come to market only next year
Yang Huiwen 15 June 2009
There may be a revival in the near-dormant market for new listings later this year as market conditions start to stabilise, say industry players.
But while prospects are expected to improve over the next six months, the real wave of initial public offerings (IPOs) may start coming to market only next year.
‘The market environment is getting more conducive for IPOs, given the lower volatility and better prospects going into the latter part of the year,’ said Mr. Ian Long, South-east Asia head of equity capital markets at Credit Suisse. ‘Valuations have bounced off their lows substantially.’
He added that a couple of issuers could be looking to list in the second half of the year.
Mr. Ding Hock Chai, co-head of Kim Eng corporate finance, also thought the market could pick up: ‘It is not going to be easy, but the market could start to pick up towards the end of the year.’
Dr Ernest Kan, of Deloitte & Touche, said there was a growing interest among companies from South Korea, Japan and China, among others, to list on the Singapore Exchange (SGX), but he acknowledged that ‘this year will still be a difficult year for IPOs’.
‘We’re seeing a pick-up in terms of inquiries compared with (the situation) six months ago, and some of these could turn into real deals next year,’ said Dr Kan, who heads the firm’s offerings services group, including IPOs.
‘It typically takes about six to nine months to prepare for an IPO, so if you want to get something going, it has to be in 2010.’
Mr. Keith Magnus, Merrill Lynch’s managing director for investment banking in Singapore and Malaysia, is more bullish.
He told Bloomberg recently that Singapore could even see its first $1 billion IPO, its largest since 2006.
‘There seems to be an air of stability in the financial markets,’ he said. ‘If we catch the right window, I think we are going to see a slew of IPOs getting done.’
There has already been a pick-up in deal flow in Hong Kong, but the Singapore market has been severely lagging by comparison.
Last month, aluminium products maker China Zhongwang Holdings staged a bumper US$1.3 billion (S$1.9 billion) listing - the world’s largest this year - on the Hang Seng Index.
Despite the turmoil in stock markets this year, the Hong Kong market has seen eight issues, raising more than US$1.6 billion, according to data compiled by Thomson Reuters.
It is also expecting a US$190 million IPO from Chinese chemical-maker Lumena Resources this month, and a potential share sale from China Minsheng Banking Corp.
However, Singapore has yet to welcome its first listing on the SGX mainboard this year. And there have been only three IPOs on the secondary Catalist board, which raised total proceeds of US$12.5 million.
Teho International, Japan Foods and Westminster Travel are now trading markedly below their IPO price.
Kim Eng’s Mr. Ding said: ‘Hong Kong tends to attract the much larger companies. There is also the perception that valuations in Hong Kong are relatively higher than what they can get in Singapore.’
The Hong Kong market is flush with liquidity compared with Singapore’s market, said Credit Suisse’s Mr. Long.
The territory’s market is also deemed to be better received by fund mangers and it does have China’s support, said Dr Kan.
Attracting more China companies to list in Singapore may be an uphill challenge, given increasing competition as well as the bad reputation incurred among some S-chips here.
‘There are increasingly more choices for them to list elsewhere, with stock exchanges in Malaysia and South Korea competing with Singapore for the same pie recently,’ said Mr. Ding.
The Straits Times understands that at least one Chinese firm - shoemaker Xingquan International Sports - aborted a Singapore IPO at the halfway stage and chose to list on Bursa Malaysia in a deal worth about RM200 million (S$82.7 million).
The fear of weak investor demand for such new listings, following the recent bad publicity on corporate governance issues among S-chips, has also deterred Chinese IPOs from coming onstream, said industry players.
‘While the market seems to be recovering, launching an IPO now is still quite difficult in terms of finding an attractive pricing,’ said an industry player whose client postponed its listing here.
‘The reputation acquired by S-chip companies adds to the conundrum.’
2 comments:
Players see revival of IPO market this year
But main wave of offerings could come to market only next year
Yang Huiwen
15 June 2009
There may be a revival in the near-dormant market for new listings later this year as market conditions start to stabilise, say industry players.
But while prospects are expected to improve over the next six months, the real wave of initial public offerings (IPOs) may start coming to market only next year.
‘The market environment is getting more conducive for IPOs, given the lower volatility and better prospects going into the latter part of the year,’ said Mr. Ian Long, South-east Asia head of equity capital markets at Credit Suisse. ‘Valuations have bounced off their lows substantially.’
He added that a couple of issuers could be looking to list in the second half of the year.
Mr. Ding Hock Chai, co-head of Kim Eng corporate finance, also thought the market could pick up: ‘It is not going to be easy, but the market could start to pick up towards the end of the year.’
Dr Ernest Kan, of Deloitte & Touche, said there was a growing interest among companies from South Korea, Japan and China, among others, to list on the Singapore Exchange (SGX), but he acknowledged that ‘this year will still be a difficult year for IPOs’.
‘We’re seeing a pick-up in terms of inquiries compared with (the situation) six months ago, and some of these could turn into real deals next year,’ said Dr Kan, who heads the firm’s offerings services group, including IPOs.
‘It typically takes about six to nine months to prepare for an IPO, so if you want to get something going, it has to be in 2010.’
Mr. Keith Magnus, Merrill Lynch’s managing director for investment banking in Singapore and Malaysia, is more bullish.
He told Bloomberg recently that Singapore could even see its first $1 billion IPO, its largest since 2006.
‘There seems to be an air of stability in the financial markets,’ he said. ‘If we catch the right window, I think we are going to see a slew of IPOs getting done.’
There has already been a pick-up in deal flow in Hong Kong, but the Singapore market has been severely lagging by comparison.
Last month, aluminium products maker China Zhongwang Holdings staged a bumper US$1.3 billion (S$1.9 billion) listing - the world’s largest this year - on the Hang Seng Index.
Despite the turmoil in stock markets this year, the Hong Kong market has seen eight issues, raising more than US$1.6 billion, according to data compiled by Thomson Reuters.
It is also expecting a US$190 million IPO from Chinese chemical-maker Lumena Resources this month, and a potential share sale from China Minsheng Banking Corp.
However, Singapore has yet to welcome its first listing on the SGX mainboard this year. And there have been only three IPOs on the secondary Catalist board, which raised total proceeds of US$12.5 million.
Teho International, Japan Foods and Westminster Travel are now trading markedly below their IPO price.
Kim Eng’s Mr. Ding said: ‘Hong Kong tends to attract the much larger companies. There is also the perception that valuations in Hong Kong are relatively higher than what they can get in Singapore.’
The Hong Kong market is flush with liquidity compared with Singapore’s market, said Credit Suisse’s Mr. Long.
The territory’s market is also deemed to be better received by fund mangers and it does have China’s support, said Dr Kan.
Attracting more China companies to list in Singapore may be an uphill challenge, given increasing competition as well as the bad reputation incurred among some S-chips here.
‘There are increasingly more choices for them to list elsewhere, with stock exchanges in Malaysia and South Korea competing with Singapore for the same pie recently,’ said Mr. Ding.
The Straits Times understands that at least one Chinese firm - shoemaker Xingquan International Sports - aborted a Singapore IPO at the halfway stage and chose to list on Bursa Malaysia in a deal worth about RM200 million (S$82.7 million).
The fear of weak investor demand for such new listings, following the recent bad publicity on corporate governance issues among S-chips, has also deterred Chinese IPOs from coming onstream, said industry players.
‘While the market seems to be recovering, launching an IPO now is still quite difficult in terms of finding an attractive pricing,’ said an industry player whose client postponed its listing here.
‘The reputation acquired by S-chip companies adds to the conundrum.’
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