The second half of 2022 will be an exceptionally busy year for IPO investors as some of Asia’s most promising companies prepare to go public. Given our wealth of data on these firms, we can provide you with seven IPOs to watch. This list encompasses a variety of industries across a diverse and rapidly expanding regional economy. 11% of Asia-based companies are currently engaged in technology sector, followed by consumer product and services (9%), industrial products (8%), and biotechnology (6%). In contrast, chemicals only represent 3%.
The world’s largest seeds company, Syngenta is one of the companies that are in the thick of the IPO tsunami at present. They have been undergoing a radical change in structure in recent years, and more importantly, their financial performance is still moving away from long-term earnings strength. However, for investors looking for an opportunity to profit with a blue chip company with exposure to high growth markets and excessive value creation (in terms of superior financial performance relative to peer groups) then Syngenta represents an attractive proposition.
Prominent CEO, Elon Musk, has projected that Tesla will be valued at $700 billion once the IPO is completed. We all know that Tesla is not a blue-chip stock. It is a story stock (a stock with no earnings history or even much of a revenue stream) in a sector that has been battered over the last decade by competition from traditional automakers and crushing debt and closing plants.
But Tesla’s business model is based on a visionary idea: that electric vehicles (EVs) can be a viable alternative fuel, and that the key to uniting consumers behind this technology is by building an infrastructure of charging stations. Although the company has been profitable since the fourth quarter of 2017, investors should not expect consistent profit from Tesla anytime soon. The company is currently valued at $61 billion despite generating a negative operating margin of 4% in 2016, followed by a positive operating margin of 10% in 2017. We do not expect much meaningful improvement in margins as Tesla focuses on expanding production capacity and building charging infrastructure.
The second half in Asia’s IPO calendar is set to kick off, as the continent sees a surge of activity. Asia has been the world’s most active IPO market for three years running with close to $300 billion raised since 2016. With over $800 billion in proceeds raised from IPOs globally in 2018, there is opportunity for companies across Asia to attract capital into their business. And it appears that the second half of 2019 is set to be one of the busiest periods yet, with plenty of activity expected.
The 7 largest IPOs in Asia are expected to be worth approximately $75 billion. Here’s the list of what to expect:
1- Syngenta Group
Syngenta is a global agricultural company that specializes in producing farming and agriculture products. Its most popular products include weed killers, seeds and seed treatments. The company is headquartered in Basel, Switzerland with many operations across the world. It has 67,000 employees globally and a market capitalization of $34.7 billion.
Bank of East Asia
This company is engaged in the provision of banking and financing services. It was incorporated as a limited company on April 4, 1996 and commenced operations on April 6, 1996. The bank’s shareholders are the Bank of East Asia (Hong Kong) Limited, Bank of East Asia (Singapore) Limited and Bank of East Asia (Thailand) Limited. The bank is headquartered in Hong Kong with offices in Singapore, Thailand, Indonesia and Malaysia. The company had an IPO priced at 36 HK cents per share in October 1996. Since then, its shares have risen to over $150 per share today.
OfBusiness is a business-to-business e-commerce website that offers services to a wide range of industries. It features large inventory of products and services offered by small and medium size companies in which it has business dealings with. The company provides shipment, logistics, warehousing support and finance services. It also provides platform, technology and consulting services to assist businesses with their expansion needs. The company was incorporated in November 2014 through an Initial Public Offering (IPO). The company was rebranded as OfBusiness within the same year. It is headquartered the United States Operations center in San Jose, California, U.S..
BeersCo is a chain of beer retail stores which has the licensing for the sale and distribution of all beers in Japan. It offers a wide selection of beers, including popular brands. The company also sells import beer and craft beers. The shares were priced at 410000 JPY per share on November 20, 2017 during the IPO. The company is headquartered in Tokyo, Japan with offices around Japan. It has a market capitalization of $23.5 billion and over 4,000 employees worldwide. It is one of the largest companies on this list.
This company is engaged in the design, manufacture and sale of chemicals, as well as providing services for the cleaning and maintenance of buildings. It was incorporated in May 18, 1978 and it began operations on May 25, 1979. The company is headquartered in Taipei City. It is part of the Fortune Global 500 list for 2018 with a market capitalization of approximately $19.6 billion.
4- K Bank
This bank provides investment banking and commercial banking services. It was incorporated on October 17, 2018 through an Initial Public Offering (IPO). The company is headquartered in Seoul with offices in Hong Kong and Shanghai. K Bank has a market capitalization of $18.5 billion with over 6,000 employees worldwide.
K Bank is set to raise approximately $7 billion when it expands into the United States and Europe through a dual listing process. It will be listed on the New York Stock Exchange initially and then list in Tokyo later this year. Its shares rose as high as $52 per share during its IPO which took place on October 19, 2018. Before that, the price was as low as $29 per share.
As of end of 2017, there are about 722 full-time programmers employed in the country and government spending on the IT sector is expected to reach NT$2.6 trillion by 2020. Taiwan’s internet penetration rate is among the highest in Asia, at over 90 percent (according to 2012 statistics).
5- Rakuten Bank
Rakuten Bank is a global internet service company with its services based in Japan. The company was created in October 21, 2010 through an Initial Public Offering (IPO). It is the first fintech bank to be established in Japan. The company offers financial services and banking products to its customers globally. It is headquartered in Tokyo, Japan with offices and affiliates spread over Japan and other Asian nations such as China, Singapore and the Philippines.
The company had raised only $141 million in its initial capitalization but its IPO was priced at more than $3.5 billion. Its shares were listed on the Tokyo Stock Exchange in March 2011 and since then prices have risen to over $100 per share.
Southeast Asia is one of the fastest growing regions in the world in terms of population and economic growth. Some countries in the region have made improvements to their IPO market, thereby attracting investors from all over the world to invest in their companies.
Other countries, such as South Korea, have made improvements to their corporate governance laws for listed companies. This encourages more investors and companies alike to do business in this country.
The number of internet users increased from 3.6 million in 2000 to 23.2 million in 2005, and have been growing steadily since then. The telecommunications infrastructure of the country is modern and well-developed: there are approximately 31 mobile phone subscribers per 100 people (as of 2012), which is among the highest in the world and the proportion of households with a computer at home was 58.1% (2012).
6- China Tourism Group Duty Free Corp
The company is engaged in the hospitality and tourism industry. It was incorporated in 1995 and commenced operations on January 1, 1996. The company is headquartered in Beijing with offices in Hong Kong, Macau, China, Southeast Asia and South Korea. The company’s IPO was priced at HKD$2.18 per share on November 26, 2017 which closed at HKD$1.79 per share on December 28, 2017.
The CPF has been building up its IT sector with the intention of investing in IT and software products. The company is looking to attract more investment opportunities in the tech sector. The CBB has also listed a number of companies which have become famous in the industry, including Renova Technology Group Corp., PCCW Inc., YTL Power Co., Po Toi Land Development Company Limited, Global Transportation Construction Co.
7- Ant Group Co
Ant Group is a diversified conglomerate in China that focuses on real estate, tourism and finance. Ant Group was incorporated on October 3, 2004, through an Initial Public Offering (IPO). The company is headquartered in Zhuhai with offices in Hong Kong, Japan, Macau and the United States. Ant Group had raised $1 billion for its initial capitalization of $1.2 billion during its IPO which closed at HKD$4.77 per share on December 21, 2010.
The company was incorporated in 1996, and commenced operations on January 1, 1997. The company is headquartered in Taipei with offices in Japan and the United States. The company’s IPO was priced at $18 per share which closed at NT$158.00 per share on March 29, 1998.
This Indian IPO among one of Asia’s biggest to watch out for this year
In the mid 1990s, ITC was one of the largest companies in the world, employing thousands of people. Times were good and so were the revenues that the company was making. Then came an economic crisis that hit India in 2008 and had an immediate impact on its IT sector. There was a slowdown in hiring employees and business revenues dropped significantly. The company downsized its workforce to cut costs, brought operations back to India and announced that it would be splitting into two: ITC Infotech (ITC) which will focus on IT services in southern Asia, with emphasis on India and South Asia; while ITC Life Sciences (ITCL) will focus on Life Sciences in India.
The number of IPO’s in India is set to grow rapidly for the second time since Prime Minister Narendra Modi came into power three years ago. The government of India has made strides in trying to attract foreign investors, making changes to its tax laws and getting rid of bureaucratic red tape. These initiatives have helped revive the IPO market in India, which was significantly impacted by the financial crisis in 2008. This has contributed to a welcoming environment for companies looking to do business and receive financing through an IPO.
Started in the year 2000, it is a local company headquartered in Orange County of the United States with its headquarters in Costa Mesa. The company has a market capitalization of $2.7 billion and has nearly 12,000 employees worldwide. The company seeks to provide financing through joint-ventures and other financial collaborations for their regional customers. For example, it provides assistance for their customer’s credit needs by securing loans from other lending institutions and arranging credit lines with certain businesses so that those customers have access to capital when they have trouble paying off loans with them directly .
Asia’s biggest IPOs to watch for 2H in 2022
The Asia-Pacific region is showing a lot of promise in the new year. The region’s IPO market is growing at a rapid pace and is set to surpass North America and Europe by the end of 2022. The region’s IPO market attracted close to $5 billion in 2017, which demonstrates a 431% growth over 2016. There are about 4,000 IPOs planned for 2018, which would amount to an average of 240 IPOs per year.
In the Middle East and Africa, an IPO is defined as a public offering of securities by a company that is listed on a stock exchange. Companies that are looking to take advantage of IPOs should be aware of the at-most-20% rule for restricted shares which often prohibits an investor from holding more than 20% of the company’s stock. It is important for companies meeting these guidelines to create a policy for shareholders to be able to vote on various matters that involve sensitive issues pertaining to the company such as shareholder protection, selection of directors and so on.
Classified as an emerging market, the Indian IPO market is currently experiencing renewed growth. The country underwent a period of stagnation in the years following 2008, but it is now an attractive destination for companies looking to list their businesses. This has contributed to a flurry of initial public offerings (IPOs) listed on exchanges across India. In fact, 26 deals have successfully closed in the first half of 2018 alone, compared to only 22 deals in all of 2017 and 16 deals in 2016 – totaling $941 million raised through IPOs during this time period, compared to $542 million in 2017 and $462 million in 2016.
This Proposed IPO is a Chinese company, whose shares will be traded on the Shanghai Stock Exchange. The company was incorporated in October 2012 as an investment holding company and becomes a real estate developer and management firm with more than 100 subsidiaries in various sectors including hospital administration and management, education, retail (supermarket) and food delivery.
Most of the IPOs are publicly traded on Mainland China Stock Exchange.
The United States is a top destination for China’s offshore IPOs who are looking to list their businesses there. This year alone, more than $5 billion in public offerings have been transacted in the US, compared to $3.7 billion in 2017 and $2.8 billion in 2016 – totaling 29 deals across 2018, compared to 22 deals in 2017 and 19 deals in 2016 – totaling a whopping $790 million raised through IPOs during this time period, compared to just $181 million raised for all of 2017 and just $322 million for 2016.
The Asian markets are currently well-positioned for IPOs. India, China and Japan have all been showing signs of growth which have contributed to a revival of the IPO market. Malaysia and the Middle East are also in the process of attracting foreign investors, making changes to regulations and implementing other reforms designed to improve their business environment and make these locations more attractive to companies looking to do business there.
Based on an analysis by Bloomberg, Asia’s IPO market is set to surpass North America and Europe by 2022. The region attracted close to $5 billion in 2017, which demonstrates a 431% growth over 2016. There are about 4,000 IPOs planned for 2018, which would amount to an average of 240 IPOs per year . The credit market is a critical source of funding for both large and small businesses.
The financial crisis of 2007-2008 has caused IPOs to go down by 50% as investors are becoming more risk-averse. Credit spreads have increased significantly since then, driving up the cost of debt capital, while at the same time reducing the cost of equity capital. On April 7, 2016, in a statement before Congress, Federal Reserve Board Chairwoman Janet Yellen stated that stock prices are not “in any way” inflated because of low interest rates.
A major factor in the IPO boom is China. Companies looking to list their businesses on this stock exchange have been spurring the market, and there are even more companies are currently planning to list their businesses there. The growth of Chinese companies is expected to continue, with over 500 companies listed on Chinese exchanges comparing to 147 in 2014.
edited and proofread by nikita sharma