Cross-border IPOs surge in first half

Cross-border initial public offerings surged in the first half of 2014, doubling in volume and amount of capital raised over the same period last year.

A global survey by Baker & McKenzie found that while capital raised by domestic IPOs increased by 29 per cent in the first six months of this year, cross-border flotations more than doubled in value, raising a total of $25.7bn in 102 listings.

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The law firm said this trend was set to continue in the next six months with a robust group of cross-border IPOs in the pipeline, including the proposed listing in New York of Alibaba, the Chinese ecommerce company.

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"The rapid growth of cross-border IPOs signals that companies are increasingly looking beyond their domestic markets and traditional financing centres to tap deeper pools of capital, access more sophisticated investor bases and compete against peer companies," said Amar Budarapu, chair of Baker & McKenzie's global securities practice group.

However, while 27 cross-border IPOs in North America raised $7.9bn in the first halfa near fourfold increase on the same period last yeardomestic IPOs outpaced cross-border listings in both Europe and Asia-Pacific.

Much of the US growth was supported by a steady stream of Chinese companies listing on Nasdaq and NYSE. US exchanges saw 10 Chinese issuers raise $3.5bn in cross-border IPOs and deliver after-market performances that beat the Dow Jones Industrial Average.

"With over 90 companies in the IPO pipeline for the North American exchanges, the number of cross-border IPOs is expected to continue to increase in the second half of 2014," said Thomas Rice, a Baker & McKenzie securities partner based in New York.

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While the amount of capital raised in European cross-border IPOs increased more than fourfold, the primary theme for the first half of 2014 was the resurgence of domestic IPOs, which increased more than fivefold.

"In the first half of 2014, the number of European IPOs surged amid improved economic outlooks and a return of investor confidence," said Edward Bibko, chair of Baker & McKenzie's European 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."

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The 44 Asia-Pacific cross-border IPOs in the first half, which were propelled by listings in Australia and Hong Kong, raised a total of $7.4bn, a 32 per cent increase over the same period last year.

However, Asia-Pacific cross-border IPOs also did not outpace their domestic counterparts. The survey said analysts had attributed the slowdown of cross-border IPOs to political turmoil and increased regulatory oversight throughout the region, which forced multiple companies to shelve IPOs temporarily.

"Volatile markets, political uncertainty and limited approvals in China may have prevented Asia Pacific cross-border IPOs from having an exceptional first half of 2014," said Ashok Lalwani, chair of Baker & McKenzie's Asia Pacific securities practice group. "There is the potential, however, that cross-border IPOs will return to form once the geopolitical issues in the region subside."

—By Andrew Bolger, Financial Times