Some Asian companies shelve IPO plans amid market fears

Some Asian companies shelve IPO plans amid market fears

    POSTED: 02 Jul 2013 12:12 AM

The recent round of market chaos and fears of tightened liquidity have led to some companies in Asia shelving plans to go public last week. But some experts remain hopeful that the appetite for IPOs will pick up in the second half of the year.

SINGAPORE: The recent round of market chaos and fears of tightened liquidity have led to some companies in Asia shelving plans to go public last week.

But some experts remain hopeful that the appetite for IPOs will pick up in the second half of the year.

Asian IPOs account for five out of the top 10 listings globally in the second quarter, according to Ernst & Young in a report last week.

There were 44 deals across Asia raising US$10.5 billion in Q2, accounting for 31 per cent of global funds raised.

But fears that the US Federal Reserve may soon scale back its stimulus programme sent markets down.

Singapore Press Holdings reportedly delayed plans to list a real estate investment trust in a S$540-million IPO.

Casino company Resorts World Manila also put on hold its US$500-billion Manila IPO.

Fellow gambling giant Macau Legend is sticking with its Hong Kong listing, but has cut its fundraising target by more than half.

Some analysts believe this bearishness is just a knee-jerk reaction.

Alvin Lim, managing director and head of Singapore advisory of global banking, Southeast Asia, at HSBC, said: “If you think about it, all this release of capital back to the US, back to where it came from - I think the question to ask is what they can invest into.

"If the US recovery isn't what it seems, I think if the tap continues to run for at least the next six months, I think money will flow back into Asia. As you can see the markets have recovered in the last few days, end of last week... So we do expect that if that continues, the IPO floodgate will open again.”

Some companies are forging ahead with their IPO plans despite lower valuations.

Japanese beverage-maker Suntory set its share price at the lower end of the proposed range, and Malaysia's AirAsia raised some US$310 million with middle-of-the-range pricing.

But a real recovery for the Asian IPO market hinges very much on China.

Max Loh, regional managing partner, ASEAN, at Ernst & Young, said: “I'm reasonably optimistic that the IPO market will be better in the second half of 2013, going into 2014. Of course that's caveated with all the market volatility, the economic situation in every part of the world, what happens in Europe in terms of the sovereign debt, the quantitative easing that we talked about.

"China, for example, is going to open up its window for IPOs in the second half of 2013, having slammed the door shut for a period of time so that should all go well, at least for the Chinese capital market.”

According to projections by Ernst and Young, global IPO activity in Q2 is expected to be up by 92 per cent by deal value, and 27 per cent by transactions compared to the first three months. 

- CNA/xq

- wong chee tat :)