Cross-border IPOs hit four-year high; late megadeals rescue 2018

The total value of initial public offerings (IPOs) has surged to a four-year high this year as global capital raising reaches $219.4 billion, inching up 5% according to new research from Baker McKenzie.

High-value megadeals are compensating for a slower year in deal volume than 2017. Following 2017’s ten-year high of 1,739 IPOs, 2018 has seen 1,448 deals; a drop of -17%. This fall is offset by a 5% increase in IPO value to $219.4 billion, boosted by Tencent Music’s $1.2 billion New York listing and SoftBank’s record $21.1 billion Tokyo listing, both expected later this month.

Koen Vanhaerents, Baker McKenzie’s Global Head of Capital Markets said: “It’s been another year of strong geopolitical headwinds – protectionism, Brexit and general uncertainty caused by elections around the world – all of which have done little to dampen capital market activity amongst certain issuers. In particular, we’ve seen an increase in cross-border IPO value in 2018, largely as a result of an increase in listings and capital raising by Chinese companies tapping deep investor pools in Hong Kong and the US. While domestic listings were down slightly from where we expected them to be, we expect an uptick in 2019 as new governments settle and certainty increases once more.”

Cross-border listing activity rebounds as Hong Kong and the US vie for listings. London / EMEA activity slumps 

Cross-border activity rebounded this year with capital raising reaching a four-year high to $62 billion, up 68% on last year. The volume of IPOs also increased by 19% to 221 listings. New listing regimes in Hong Kong which make it easier for companies to list, as well as the continued growth in Chinese-domiciled companies listing in the US has been behind much of the increase.

In fact, of the 10 largest cross-border IPOs this year, eight have involved Chinese issuers with China Tower Corp Ltd’s $6.9 billion Hong Kong Stock Exchange (HKSE) listing the largest. Chinese tech start-ups also continued to flock to the US for better fundraising options, with e-commerce company Pinduoduo raising over $1.6 billion in July with its Nasdaq listing.