Asia bankers expect IPO revival as stock swings ease

IPOs made up 10 percent of the US$33 billion of stock offerings in Asia, excluding Japan and mainland China, according to data compiled by Bloomberg. The decline in IPOs occurred as investors sold stakes in Chinese banks and financial companies raised funds in rights offerings, more than tripling the overall value of equity sales from the second half of 2008.

Stock-market gyrations that made it harder for companies to complete IPOs are easing, said bankers, including Justin Haik at Morgan Stanley in Hong Kong. The benchmark for U.S. stock market volatility closed June 29 below where it was just before Lehman Brothers Holdings Inc. filed for bankruptcy Sept. 15.

"The IPO market will start to get pretty active," said Kester Ng, Asia-Pacific head of equity capital and derivatives markets at JPMorgan Chase & Co. in Hong Kong. "A lot of companies that put IPOs on the shelf for the last 18 months have started working."

The Chicago Board Options Exchange Volatility Index, which measures the cost to insure against losses in the Standard & Poor's 500 Index, dropped 67 percent through June 30 from a Nov. 20 peak. A measure of the volatility of the MSCI Asia Pacific Index has fallen to the lowest since Sept. 4, according to Bloomberg data.

IPOs in Asia outside Japan dwindled to US$3.36 billion in the six months ended June 30 from US$14.3 billion a year earlier, the slowest half since 2003, Bloomberg data show.

As many as 100 companies may be reviving Hong Kong IPO plans after the equities rout delayed sales scheduled for 2008, said Jonathan Penkin, Goldman Sachs Group Inc.'s Hong Kong-based head of equity capital markets in Asia outside Japan. The city was the largest IPO market in the region.

Haik, a managing director in Morgan Stanley's global capital markets group, expects at least five IPOs worth more than US$1 billion each in Asia during the next six to 12 months. China Zhongwang Holdings Ltd.'s US$1.3 billion sale in April was the only one to surpass that mark in the first half.

American International Group Inc.'s Asian life insurance unit may raise as much as US$8 billion in an IPO during next year's first quarter.

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