Deal volumes have reduced dramatically in Asia in the first quarter of 2013, according to Ernst & Young’s "Global IPO Update."
Asian stock exchanges raised just $5.1 billion in 58 IPOs, accounting for 28% of global capital raised this quarter. Capital raised was down 38% compared to the first quarter of 2012 ($8.4 billion raised, from 97 deals) and a 40% drop by deal number.
The decline is due to a halt in listings on Chinese exchanges since November 2012. The new proposal for additional scrutiny of potential listings when markets reopen is likely to slow activity. There were no Chinese IPOs on mainland China exchanges in Q1’13, and a slight reduction in deal volume in Hong Kong ($1 billion, from 9 deals) in Q1’13 compared to Q1’12 ($1.4 billion via 14 deals).
The IPO markets in Singapore and Japan fared better. Stock exchanges in these markets accounted for 62% of capital raised in the region in Q1’13. Interest in REITs (real estate investment trusts) remained particularly strong.
Several large REIT listings, including the $1.4 billion Mapletree Greater China Commercial Trust on Singapore exchange and the $1.1 billion Nippon Prologis in Japan, were dominant. Attractive yields and tightening market conditions in commercial real estate drove their successful IPO performance.
“The Asian market will be lower in the first half of 2013, but is expected to be more active in the latter half of the year with entrepreneurial IPO activity," says Maria Pinelli, Ernst & Young’s Global Strategic Growth Markets Leader. "We are seeing a reduction in the number of state-owned enterprises in the IPO markets from China; other markets within Asia have been more active in state-owned IPOs.”
Global IPO Activity Up
Globally, IPO activity is up 1% by capital raised and down 42% by deal volume so far in Q1’13 (118 IPOs, raising $18.2 billion in proceeds), compared to Q1 2012 (204 IPOs raising $18 billion in proceeds) according to Ernst & Young’s Global IPO update.
The global IPO pipeline analysis also indicates an additional 31 IPOs are scheduled before the quarter’s end and should raise an additional US$5 billion.
Real estate dominates the sector picture in terms of funds raised – accounting for over a third (34%) of global IPO activity ($6.2 billion) and by number of deals (15%, 18 deals). Reflecting the Zoetis IPO, healthcare (15%, $2.8 billion) and industrials (9%, $1.6 billion) were also active by capital raised. In terms of number of deals, industrials ranked second (14%, 16 deals) followed by consumer products (10%, 12 deals).
“Real estate IPOs will dominate globally in Q1’13. We also expect life sciences, technology and oil and gas to lead the US IPO markets. In Asian markets we will continue to see materials, industrials and financial services IPOs coming to market. In Europe, real estate and financial services will dominate in terms of the number of deals,” concludes Pinelli.