SocGen’s uber-bear Albert Edwards has been at it again, predicting on Monday that markets worldwide will hit a fresh low in 2010 and suggesting that a new global recession is on the way. Oh, and faith in growth stories is a “sick joke”, he noted.
Whether it’s a “sick” faith in growth stories or the usual burning desire for a quick buck, Asia isn’t listening as it prepares for the biggest wave of equity offerings the region has seen in a long time — nearly $14bn worth in coming weeks.
Of course, China’s lifting of its nine-month ban on IPOs in June has helped greatly. Since IPOs were resumed in June, companies have rushed to list in Shanghai and take advantage of what appears (right now, anyway) to be ample liquidity and investor interest.
Leading the charge are China Minsheng Banking Corp, the country’s first privately-owned bank, and Sands China, the Macau arm of Sheldon Adelson’s Las Vegas casino empire, with plans to raise as much as a combined $7.5bn through their Hong Kong listings.
Minsheng, whose shares already trade in Shanghai, aims to raise up to $4.68bn in Hong Kong’s largest IPO this year – and the world’s fourth-largest if the shares price at the top end of the HK$8.50-HK$9.50 range.
Meanwhile Sands China is going for as much as $3.4bn (HK$26bn) in its planned IPO. Over in Malaysia, Maxis, the country’s largest mobile-phone operator, is aiming to raise up to $3.67bn in an IPO for 30 per cent of its shares in Kuala Lumpur while in Shanghai, China Merchants Securities plans to raise $1.6bn in what would be the third-largest IPO in that market this year.
Among smaller regional companies preparing equity offerings, two Chinese companies started bookbuilding on Monday for Hong Kong IPOs: Fantasia Holdings Group, a Chinese property developer which is hoping to raise up to $414m, and Sany Heavy Equipment, a Chinese maker of coal-mining equipment, which said on Monday it hopes to raise $310m in its IPO.
The listing comes as Singapore’s CapitaLand, the largest property developer in south-east Asia, prepares to price shares shortly for the IPO of a 30 per cent stake in CapitaMalls, its retail arm, which manages and part-owns shopping malls valued at S$20bn ($14.4bn).
In fact, the mood was summed up by Gabriel Chan, a Credit Suisse analyst in Hong Kong, who told Bloomberg: “There are so many IPOs coming up, and we don’t know how long loan growth in China can last…It’s better to do it now than later.”
As the FT noted in September, Chinese companies listing on the mainland and in Hong Kong have raised four times more than European and US issuers combined so far this year, highlighting the strength of investor appetite for IPOs in the region – and that is only after the IPO ban was lifted in June. In fact, the world’s two largest IPOs this year came from China State Construction Engineering and Metallurgical Corp of China (MCC), which debuted in Shanghai in late September after raising $5.12bn in a dual listing.
By late September, Chinese issuers had raised $21.9bn this year compared with a combined $5.4bn raised by European and US issuers, according to Dealogic. Region-wide, Asian issuers had raised a total of $28.4bn since January.
That figure is now about to take a giant leap.
According to FinanceAsia, a number of other Hong Kong listing candidates have began pre-marketing ahead of a formal launch in the next couple of weeks. Among them are Resourcehouse, an Australian mining company seeking about $2.5bn; Longyuan Power, a wind power generator looking to raise $1.5bn to $2bn; and China Forestry, which is hoping to raise $150m to $200m.
But in international terms, the most interesting IPO heading for Hong Kong is that being planned by United Co Rusal, the aluminum maker controlled by Russian billionaire Oleg Deripaska, which has applied to sell about 10 percent of its shares in Hong Kong. As the FT reported on Monday, Deripaska is in the final stages of agreeing a restructuring deal with foreign creditors on $7.3bn in debts, a vital precondition for the IPO, valued at $1bn to $2.5bn, to go ahead. But even if he reaches agreement in time for a key November 19 hearing at the Hong Kong Stock Exchange, he must still race to win creditor committee approval from the more than 70 banks by end-November and then market the sale to investors in the two weeks left before most leave for Christmas in mid-December.
Further complicating matters, the New York Times reports on Tuesday that Rusal has threatened to sue Vedomosti, a leading Russian business newspaper, for publishing leaked information before its planned IPO. The report notes:
A series of articles in the business newspaper Vedomosti at the end of October detailed Rusal’s dismal financial results for 2008 and included other facts about the company. The articles cited documents given to bankers at a conference closed to the public. That scoop is evolving into a legal test for business publications in Russia, a country where the political press is already kept on a tight rein.
Rusal’s Hong Kong IPO plan, alongside the flood of Chinese IPOs, are shaping up to be a critical test of market capacity in what will be a very busy period for new issues.
Related links:
Chinese IPOs – Lex
Hong Kong IPOs expected to pick up in second half - FT