Monday, August 11, 2008

IPO Activity In The Asia Pacific Region - Aug 11 , 2008

The IPO activity in the Asia Pacific region has nearly halved in the first half of this year, with two of the fastest growing economies - India and China - reporting a drop of nearly 18 billion dollar in mobilisation of such deals.The total capital gathered by India Inc through IPO in the first half of 2008 stood at $4.07 billion as compared to $7.68 billion in the same period in 2007, global accounting and consulting firm Grant Thornton said.

Meanwhile, data by another deal tracking firm Dealogic said IPOs by Chinese issuers have raised $15.5 billion through 103 deals so far this year, nearly half of the amount raised in the corresponding period a year-ago ($29.5 billion)."This mirrors the wider Asia Pacific trend where issuance decreased 47 per cent to $28.2 billion by way of 330 deals," Dealogic added.

The slowdown of the IPO activity should be seen in the light of the fact that equity market across the world corrected sharply. While the Shanghai Stock Exchange Composite Index plunged 47.82 per cent, the Bombay Stock Exchange benchmark index Sensex lost as much as 29.23 per cent in the first half of this year.

Around 66 per cent of Chinese issuers have opted to list domestically via the Chinese A share market in 2008 so far this year as compared to 46 per cent in the corresponding period of the previous year.Interestingly Grant Thornton''s latest report also highlights the fact that the number of IPOs by corporate India during the half year ended June 2008 has also witnessed a decline, falling to 29 IPOs from 59 issues made during the first half of 2007.The top five IPOs of 2008, accounted for around 85 per cent of the total capital raised during the period between January to June this year.

The top five IPOs of this year include Reliance Power, which raised 2,565 million dollar, Rural Electrification Corporation that mopped up 409.82 million dollar, IPB Infrastructure developers raised 236.14 million dollar, Future Capital grossed 122.84 million dollar, while OnMobile Global raked in 119.91 million dollar.

Around 77 per cent of the total capital raised in India in the first six months of this year was from the power and energy sector, followed by real estate and nfrastructure management which accounted for 9 per cent of the total amount raised. While, in case of China, the initial public offering of China Railway Construction Corp was the largest IPO this year and the sixth largest on record. It priced its 5.7 billion dollar IPO in March via CITIC Group, Citi and Macquarie Group.

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