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December 27, 2015 | 10:30 | Dubai
After significantly outperforming domestic initial public offerings in both value and volume growth terms the past two years, cross-border deals slid back to just below 2013 levels in 2015. Domestic and cross-border IPO activity both fell, for a number of different reasons. Potential issuers faced poor market performance, geopolitical uncertainty, low commodity prices and interest rate rises on the horizon, according to a Cross-Border IPO Index by global law firm Baker & McKenzie.
Overall, cross-border IPOs raised $37.8 billion worldwide to December 10, down 53% from last year. Though to put that in context, cross-border deal values rose 98% in 2014 and 73% in 2013. Domestic issuance fell a more modest 25%, but off the back of a rise of just 2% in 2014. Cross-border volumes declined 32% to 128 deals after a 26% gain in 2014 and 58% increase in 2013. Domestic volumes also fell, by 17%, the report said.
China provided some of the biggest equity shocks of all, with stock markets swinging wildly amid fears of a Chinese hard landing, which have since dissipated. Ironically, amidst the volatility, the Asia-Pacific region is the only one to have seen increased cross-border IPOs, demonstrating both the robust nature of Chinese markets and the interconnections between economies.
Nine of the 10 largest global cross-border deals were Chinese companies listing on the Hong Kong Stock Exchange. Financials dominated, with the two largest deals being Huatai Securities Co Ltd and GF Securities Co Ltd, showing growing demand in China for access to financial products as the middle class continues to grow and become wealthier, diversifying investments into securities as well as real estate. Just three exchanges accounted for 93% of all cross-border IPOs in 2015: the Hong Kong Stock Exchange, Nasdaq and the London Stock Exchange.
Globally, 2015 saw increased cross-border IPOs in the telecommunications, healthcare, financials and industrial sectors. Telecommunications IPO values grew by 266%, driven by Chinese Telcos listing in Hong Kong. Meanwhile high-tech companies saw the largest decline in capital raising from cross-border IPOs. By volume, healthcare companies were the most active, with 38 cross-border IPOs (21 of which are in North America), accounting for 30% of total cross-border IPO volume, followed by financials and industrials with 17% and 10% of volume market share, respectively.