* Companies may try alternative funding plans as IPOs
* SGX CEO Bocker says investors "very cautious" on going
* IPO applications in HK up 35 pct this yr through Aug
By Elzio Barreto
HONG KONG, Sept 26 IPO hopefuls that have lined
up in record numbers to go public in Singapore and Hong Kong in
2011 are giving up listing plans for now as investors' appetite
for stocks vanishes and the window for new share-sales closes.
With markets on high alert over Europe's sovereign debt
crisis and concerns over the U.S. economy, the list of Asia
IPO's getting pulled is getting longer. That would mean
companies might have to seek slower growth or find alternative
ways to raise funds.
Singapore shares fell to a 16-month low on Friday, while
Hong Kong's market ended the week with its worst performance
since 2008. The slump continued on Monday, with benchmark
measures plunging more than 2.6 percent and 3.7 percent,
Sany Heavy Industry and rival XCMG Construction
Machinery Co Ltd were the latest casualties caught
in the storm shaking markets, after deciding to postpone up to
$4.5 billion in deals last week.
Insurers, brokerages and banks including Haitong Securities
, New China Life and China Guangfa Bank that have
unveiled massive capital-raising plans could also face pressure.
"At the moment all you have is bad news coming into the
market," said Philippe Espinasse, a former investment banker
with Nomura and UBS in Hong Kong and author of 'IPO: a Global
Hong Kong, the top global destination for initial public
offerings for two years running, has seen a surge in IPO
The former British colony had a pipeline of 115 companies
with active IPO applications in 2011 through the end of August,
35 percent more than the same period in 2010, according to
The figure reflects the number of companies that received
approval from the Hong Kong exchange's listing committee, but
still haven't sold shares.
Hong Kong's increase in IPO applications is also mirrored in
"We never had so many companies wanting to come to the
Singapore market," Singapore Exchange Ltd CEO Magnus
Bocker said at an event in Hong Kong last week. "That happens at
the same time the markets are very volatile and I think there's
a lot of investors that are very cautious to go into IPOs."
"We need to see what happens in Europe and the U.S., that
needs to be resolved before we see the real flow of new IPOs
coming," he added.
Despite the surge in IPO submissions, several companies have
postponed or cancelled listing plans the past months, including
China Everbright Bank and container leasing company
China Shipping Nauticgreen.
After getting started with investor meetings and setting
listing dates, both Sany Heavy, China's largest construction
machinery maker, and XCMG Construction had to give up plans last
"It's very challenging at the moment. Anyone that has a deal
live right now is scrambling to get it done," said the head of
equity capital markets at a top international investment bank,
who was not authorized to speak publicly on the matter.
Citic Securities Co Ltd is braving volatile
markets with its nearly $2 billion offering fully covered by
orders from cornerstone and anchor investors, but others might
face more difficulty.
PCCW Ltd , owned by tycoon Li Ka-shing's son
Richard Li, said late on Sunday it could raise up to $1.3
billion from the spin off of its telecommunications assets in a
business trust, but the listing was "subject to market
conditions and pricing."
Citic Securities, Haitong Securities, New China Life and
China Guangfa Bank, were among financial companies that unveiled
plans to raise $35.4 billion in stock offerings in Hong Kong and
China in coming months to replenish their capital base.
Citic Securities Chairman Wang Dongming said on Wednesday
the Hong Kong offering, set to be priced on Sept. 28, had been
"very well received" by investors.
For other financial services companies, it may be time to
"Banks will have to slow down their balance sheet growth,
cut their dividends to preserve capital," said one investment
banker, who advises financial institutions. "Some of them might
take some private investments or do small private placements to
tide over the immediate problem."
The record IPO applications signal companies want to be
ready to tap markets if appetite for equity offerings returns
soon, Espinasse, the former investment banker, added.
Depending on how long the IPO applications have been
approved, companies will have to update their financial
information before starting to market deals to investors.
"Things tend to bounce back here faster than the rest of the
world," Espinasse said. "God knows what's going to happen in two
or three months' time and whether the markets will be back.
Probably people are taking stock of that.
"People probably take the view that why don't we do that, so
we're in a position to launch a transaction reasonably quickly
once the market picks up again," he added.
(Additional reporting by Denny Thomas; Editing by Muralikumar