Busiest summer for Asia IPO on record with deals worth $56 billion in third quarter

Thanks to blockbuster deals in markets such as South Korea and India, data compiled by Bloomberg show, share sales in the region for the first time raised $56 billion in the three months to September 30, the highest for such a period.

“The activity will continue — 2021 is an exceptional year for equity capital market volume,” said William Smiley, co-head of Asia’s ex-Japan equity capital markets at Goldman Sachs Group Inc. “Global investors still want access to Asian growth.”

Asia’s record third quarter came despite a slowdown in Hong Kong, one of the world’s busiest listing locations. As Beijing broadens its efforts to rein in corporates and align business models with President Xi Jinping’s “shared prosperity” campaign, it wiped nearly $1 trillion from the value of Chinese stocks globally in July Gaya and Hong Kong’s stock benchmark plunged into a bear market in August.

he saw listing volume The financial center declined to $6 billion in the third quarter, trailing Korea for the first time in four years. It was also the lowest quarterly IPO for Hong Kong since the beginning of 2020, when the pandemic was taking hold and equity capital markets came to a standstill.

The performance of the stock was also affected. Shares of firms that listed in Hong Kong and raised at least $100 million in the third quarter climbed an average of only 2.8% from their offer prices, according to data compiled by Bloomberg. This is versus 20% in South Korea and 25% in India, both saw a large increase in volumes as compared to the first two quarters.

“After the first half for the Street, we are still seeing good activity levels for the remainder of this year, albeit at a slower pace,” said Magnus Anderson, co-head of Asia Pacific Equity Capital Markets at Morgan Stanley. We expect a healthy pipeline as we enter next year.”

Korea and India

Game developer Crafton Inc. And IPOs such as online-only bank KakaoBank Corp. drove third-quarter volumes in Korea to $10.4 billion, which was four times in each of the previous two quarters.

Similarly, in India, food-delivery startup Zomato Ltd. raised $1.3 billion in July. Several more listings are ready for the final quarter, starting with digital payments company Paytm, which has filed to raise 166 billion rupees ($2.2 billion) in the country’s biggest IPO.

“India now has a knowledgeable, tech-educated population with good Internet access,” said Anvita Arora, co-head of Asia Pacific Equity Capital Markets at Bank of America Corp. “Technology is a combination of factors for success. In general the tech pipeline is very strong.”

China headwind

While Shanghai struck its biggest third-quarter deal in Asia with China Telecom Corp’s bumper offer, some bankers expect a massive pipeline of Chinese listing candidates to return soon. This is due to continued uncertainty on the regulatory front and issuers await new rules on foreign IPOs.

Chinese firms that were initially eyeing Hong Kong or US listings can now choose to raise money privately as they wait for the clouds to clear.

Even with Hong Kong in recession, share sales in Asia for the first time have raised $140.5 billion so far in 2021, more than the same period of any other year, Bloomberg-compiled data shows.

And while IPOs by Chinese issuers may slow down over the next three months, listed companies are still raising funds.

London-based insurer Prudential Plc received $2.4 billion in Hong Kong share sales in September in one of the city’s biggest follow-up offerings.

Goldman’s Smiley said the color of transactions in Asia will be different from 2020, and may require a more thoughtful approach to price, size and structure, but deals will continue to happen.

This story has been published without modification in text from a wire agency feed.