More firms scrap Asian IPOs as markets slide

HONG KONG/SINGAPORE (Reuters) - Two more firms ditched plans for initial public offerings (IPOs) in Asia, adding further gloom to a market which recently showed signs of a revival after a dismal start to the year.

On Thursday, Hong Kong-based bulk cargo shipping firm Maritime Capital Shipping withdrew a Singapore listing worth up to $300 million and Chinese sportswear retailer Xdlong International Co Ltd scrapped a $127 million Hong Kong IPO.

Macau tycoon Stanley Ho’s casino flagship, Sociedade de Jogos de Macau Holdings Ltd, raised $494 million in a Hong Kong IPO after pricing its shares at the bottom of an indicated range, sources close to the deal said on Thursday.

The withdrawals come amid a severe downturn in global equities, with MSCI’s index of Asia-Pacific shares outside Japan falling 14 percent since the end of May.

The index has fallen 22 percent so far this year.

“Asian IPOs have almost reached a standstill,” said Leslie Phang, the Singapore-based head of investments at private client unit of Schroders, which manages $260 billion globally.

“Issuers are unwilling to launch at lowered valuations and investors are more focused on reducing their equity positions.”

About 35 companies in Asia-Pacific excluding Japan have withdrawn plans to raise about $20 billion from IPOs so far this year, according to Thomson Reuters data.

Asia’s IPO volumes totaled $23.3 billion in the first half, a 40 percent drop from the year-ago period. Second quarter volumes totaled just $9.1 billion, the worst quarter since 2005.

The relentless surge in oil prices, which hit a new record above $145 a barrel on Thursday, concerns over high inflation and a global economic slowdown have sent issuers scrambling to ratchet down their fund-raising expectations or scrap listings altogether.

A global credit crisis has also cut off traditional debt-related funding for many smaller firms looking to raise funds to expand.

On Wednesday SK C&C, the technology outsourcing arm of South Korean conglomerate SK Group, delayed its IPO worth up to $1.2 billion, blaming unfavorable market conditions.

The market for Asian IPOs briefly reopened in early June when companies scraped through with listings after pricing issues at or near the bottom of their indicated range.

“Unfortunately, the performance of global equity markets has deteriorated sharply in the last few days and equity markets have closed for IPOs, regardless of the underlying fundamentals of the company,” Mark Harris, chief executive of Maritime said on Thursday.

The Hong Kong-based firm, which ships dry bulk commodities, wanted to sell existing and new shares to raise capital to buy new ships. UBS UBSN.VX was the lead manager for the IPO.

Even issues from once-hot consumption sectors, which are seen as a play on surging domestic demand in China, have faltered.

Chinese sportswear retailer Xdlong, which designs, manufactures and distributes sports shoes and apparel, had planned to sell 500 million shares at HK$1.38-HK$1.98 each.

The firm was not able to draw sufficient orders from both institutional investors and Hong Kong retail investors, which made it difficult to proceed with the IPO, a source familiar with the situation said.

Goldman Sachs GS.N and Deutsche Bank are the joint bookrunners for the deal.

“I prefer buying stocks from secondary market to new issuance as shares of blue chips were down to an attractive level. I think equity capital markets should be continuously difficult in the second half,” said Antonny Cheng, managing director at Gain Asset Management Ltd.

On Wednesday, Pricewaterhouse Coopers slashed its 2008 estimate for fund raising from Hong Kong IPOs by 54 percent to HK$130 billion (US$16.7 billion), blaming weak market conditions and global volatility.

Also on Wednesday, Tokyo Stock Exchange, the world’s second largest, said it might delay its plans to list its shares on its own exchange for the second time.


(Additional reporting by Alison Leung)

Editing by Anshuman Daga