Asia bankers expect IPO revival as stock swings ease

Shareholders, including Goldman Sachs, Bank of America Corp., UBS AG and Royal Bank of Scotland Group Plc, sold a combined US$10.8 billion worth of stock in Bank of China Ltd., China Construction Bank Corp. and Industrial & Commercial Bank of China Ltd. in the period, increasing the value of deals.

U.S. and European banks, which initially bought into the Chinese lenders in 2005 and 2006, rushed to sell after lockup periods on their holdings expired, helping them restore finances hobbled by credit market losses.

"People needed to repair balance sheets," said Steve Barg, Asia head of global capital markets at UBS in Hong Kong.

The sales attracted hedge fund and mutual fund managers that boosted cash holdings late last year in preparation for investor redemptions that didn't materialize, Barg said.

Last year's equities rout thinned the ranks of private banks and Hong Kong billionaires buying IPOs. Private banks representing wealthy individuals are less willing to buy new shares than they were in 2006 and 2007, when booming markets drove stock offerings in Asia to records, said JPMorgan's Ng.

Chinese investors are playing a bigger role, said Jason Cox, Hong Kong-based head of Asia-Pacific equity capital markets at Bank of America Merrill Lynch. In Hong Kong, Chinese funds and companies account for as much as 30 percent of institutional orders for IPOs, up from less than 10 percent in 2006, he said.

Lower price expectations among companies mulling IPOs may draw more investors to sales, said Goldman's Penkin.

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