(Reuters) Share sales in Asia ex-Japan are set to rebound in 2017 from three-year lows this year, driven by listings of financial firms in Greater China, including the world’s biggest fintech IPO, and a further revival of offerings in India, bankers and investors said.
An up to US$5bn listing from China’s largest peer-to-peer lender Lufax and potential IPOs from e-commerce giant Alibaba’s online finance arm and Sinopec Marketing in Hong Kong are expected to help reverse this year’s 22.5% slide in Asia-Pacific equity capital markets deals.
Deal flow is expected to get a boost from mainland China’s recent move to relax approvals for IPOs to help control the rapid build-up in corporate debt there and cushion its slowing economy.
Regulators “will keep giving a lot of companies, specially the banks, liquidity to help the economy” in China, said Ringo Choi, Asia-Pacific IPO leader at consulting firm EY.
“With a strong pipeline of companies ready to list and investor sentiment unaffected by political shockwaves elsewhere in the world, we expect Greater China exchanges to remain the world’s most active markets for IPOs in 2017.”
ECM activity in Asia-Pacific dropped in 2016 as weak IPO performance curbed demand for new listings in the region and listed companies slashed secondary offerings because of volatile markets. The US$207.4bn of equity offerings were the lowest since the US$159bn raised in 2013, preliminary Thomson Reuters data show.
Follow-on share sales sank 29.3%, far outpacing the 2.4% decline in IPOs, according to data through December 28.
Hong Kong, the world’s top venue for IPOs for a second straight year, is forecast to have about US$26bn of new listings in 2017, slightly higher than the US$25bn in 2016, EY estimates.
Potential large listings in the city next year include those of Lufax and Alibaba arm Ant Financial, which was last valued at US$60bn. Either of those IPOs would be the largest by a financial technology company globally.Chinese startups that have raised billions of dollars and experienced fast growth over the past several years are also lining up IPOs either in 2017 or 2018.
“We could be looking at significantly-sized, very strong IPO candidates in the coming years, as growth continues to accumulate and from the asset pool that’s been built up over the last five years,” said Juan Delgado-Moreira, managing director at Hamilton Lane, which invests in venture capital and private equity funds.
Financial services companies that dominated Asian equity offerings in 2016 will continue the trend next year, bankers and analysts said. Likely Hong Kong IPOs include Guangzhou Rural Commercial Bank’s up to US$1.5bn deal, an up to US$1bn IPO from China United Insurance Holding Corp and Ping An Securities’ up to US$1bn deal.
Apart from IPOs, some already-listed financial services companies are expected to seek secondary offerings in different exchanges to raise money for expansion, including Chinese brokerage Guotai Junan Securities Co, which plans to raise at least US$2bn in Hong Kong, and China Galaxy Securities, which aims to raise about US$1.7bn in a share sale in Shanghai.
Elsewhere in the region, South Korea is expected to have a strong year for new listings, with mobile gaming company Netmarble Games looking to raise US$1.8bn and Lotte Group likelyreviving the US$4.5bn IPO of Hotel Lotte. In Singapore, NetLink Trust, the broadband subsidiary of Singapore Telecommunications, could raise up to US$2.5bn, IFR has reported.
With about US$4bn worth of deals, India had its best year for IPOs in 2016 since a US$8.4bn record set in 2010. Next year bankers expect another positive showing, despite Prime Minister Narendra Modi’s recent outlawing of high-value currency notes, or demonetisation.
Likely deals include an up to US$1bn listing from National Stock Exchange and US$440m from toll road owner Reliance Infrastructure.
“Next year also, in terms of (IPO) deals it should be quite strong,” said Subhrajit Roy, head of ECM origination at Kotak Investment Banking.
“Due to demonetisation, in some cases valuations might have to be adjusted for certain sectors. However, the other noteworthy aspect is that demonetisation will channelise substantial savings to the financial sector,” Roy added.