Shares in Japan Prologis REIT, a real estate investment trust set up by the world's largest owner of industrial buildings, soared more than 20 percent in their Tokyo market debut on Thursday. The strong start for the $1 billion initial public offering (IPO) is a sign that Asia's IPO market is getting its buzz back, analysts say.
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Asia's IPO market suffered last year with companies shelving their plans to list because of a weak economic outlook. The total value of Asian IPOs fell by 35 percent to $57.1 billion deals in 2012 from $87.8 billion in 2011, according to data provider Dealogic.
But generally brighter prospects for the global economy and growing investor confidence have encouraged investors back into equity markets in recent months. The Nikkei stock index has done particularly well, rallying some 31 percent since mid-November as Japan makes a concerted bid to revive its economy and end years of deflation.
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"There is a pipeline of deals set to come to market. Macro uncertainty kept funds out of Asia last year, now allocators are seeing fund flows back into Asia," said West Riggs, MD and head of Asia Equity Capital Markets at U.S. asset manager Piper Jaffray. "More flows equal more dollar supply and therefore more IPOs. I expect a good 2013 for Asian IPOs."
The Japan Prologis REIT IPO raised 100.3 billion yen ($1.08 billion). Bids were outnumbered four times, and the shares surged by as much as 27 percent on open on Thursday to 700,000 yen, substantially higher than the original offered price of 550,000 yen.
Japan has raised $1.4 billion in IPOs since 1 January 2013, making it Asia's hottest market for new listings. This compares with $18 million over the same period last year. Hong Kong ranks second and has raised $788 million since 1 January, compared with $227 million over the same period last year, according to Dealogic.