Growth outstrips that of domestic IPOs in North America but not Europe, study finds
The number of cross-border IPOs more than doubled in the first half of 2014, easily outstripping domestic IPO growth in the US as many Chinese corporates looked to the States to raise capital, according to a study by law firm Baker & McKenzie.
The transactional lawyer group suggests capital raised by cross-border IPOs worldwide increased by 151 percent to reach a value of $25.7 bn, outpacing the 29 percent growth of domestic IPOs. The number of cross-border IPOs also doubled to 102 in the same period.
‘The rapid growth of cross-border IPOs signals that companies are increasingly looking beyond their domestic markets and traditional financing centers to tap deeper pools of capital, access more sophisticated investor bases and compete against peer companies,’ says Amar Budarapu, chair of Baker & McKenzie’s global securities practice group.
The firm also predicts that cross-border IPOs will continue to outpace domestic IPOs in the second half of the year due to a number of listings already being scheduled, such as that of Chinese e-commerce group Alibaba, which is expected to raise more than $20 bn.
Cross-border IPOs in North America surged by 274 percent in terms of capital raised, with $7.9 bn collected in a total of 37 cross-border initial offerings, driven by rising stock markets in the region. Chinese issuers were responsible for 10 of those, raising a combined total of $3.5 bn through US exchanges and beating the Dow Jones Industrial Average over the first six months of the year.
In Europe, on the other hand, the number of domestic IPOs quadrupled during the first half of 2014, beating the 300 percent growth in cross-border IPOs. The London Stock Exchange led exchanges in the region in terms of hosting said listings, with 21 of them raising a combined total of $4.9 bn.
‘In the first half of 2014, the number of EMEA IPOs surged amid improved economic outlooks and a return of investor confidence,’ says Edward Bibko, chair of Baker & McKenzie’s EMEA securities practice group. ‘Cross-border IPO growth in the region was strong, but it couldn’t match the blistering pace of domestic IPOs, which were making up for a decade-long break.’