New IPOs may signal turnaround in Asian activity slowdown

AirAsia X and Hong Kong’s Langham Hotel chain seek $888 mn in IPOs, following Sinopek and China Galaxy announcements

Budget airline AirAsia X and Hong Kong-based Langham Hospitality Investments, the owner of the Langham Hotel chain, have announced plans for IPOs seeking to raise a combined total of almost $900 mn, helping Asia recover from a first-quarter slowdown in IPO activity.

Langham Hospitality plans to raise as much as $588 mn in Hong Kong from its IPO of the Langham Hotel chain while AirAsia X seeks to raise as much as $300 mn from an IPO in its native Malaysia to finance expansion, according to media reports.

The announcements come as Asia seeks to recover from a slowdown in IPO activity after years of growth. So far this year, the Asia-Pacific region has accounted for just 16.4 percent of all IPOs priced, according to regularly updated data from Renaissance Capital. IPO activity slowed in the first quarter of this year in Asia even as global activity surged, led by offerings in North America, according to Renaissance. Global IPO proceeds increased by almost half to $18.4 bn while proceeds raised in Asia dropped sharply to $3.5 bn.

The Asia slowdown was particularly notable in Hong Kong, which led global IPOs between 2009 and 2011 and dropped to fourth place, behind New York, London and Mexico City, last year. So far this year, Hong Kong is 12th place in the world for IPOs, according to Dealogic analysis. But the AirAsia X and Langham Hospitality IPOs join other recently announced offerings in what may represent a turnaround in Asian IPO activity and boost, in particular, the waning status of Hong Kong as a major IPO destination.

Sinopek HK, a refining and petrochemical unit of China’s state-owned Sinopec, is currently seeking to raise $1.4 bn in an IPO in Hong Kong while China Galaxy Securities is now seeking to raise around $2.2 bn in a listing in the city. Hopewell Hong Kong Properties, a spinoff of Hopewell Holdings, also seeks to raise $800 mn soon in a Hong Kong IPO, according to the Wall Street Journal.

A study by PwC late last year also predicted that Asian markets – particularly Hong Kong and Singapore – will eclipse the traditional markets of London and New York as the top destinations for cross-border listings in coming years.

‘Exchanges in developing markets have typically not had the depth to sustain capital requirements to support their growing economies,’ Clifford Tompsett, capital markets partner and head of PwC’s IPO center, says in the report. ‘This has started to change. With an increasingly sophisticated capital markets infrastructure in emerging markets, there will be more opportunities for issuers to raise capital locally or regionally, beyond traditional listing centers.’

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