Signs of market recovery?

Sign of market recovery when 8 IPOs are launched
If the economy does improve, ‘08 IPOs could be worth US$4.5b, beating '07
By SIOW LI SEN

AS a sign of market recovery, Singapore could see eight IPOs worth US$4.5 billion launched for the rest of the year provided the market holds up, said Thomson Reuters.

Hopefully waiting: Mr Hiew (above) and Mr Thornton (next) both have listings in the pipeline If indeed market sentiment does improve, IPOs for 2008 could outdo those launched last year which amounted to US$2.65 billion from 26 deals.

So far this year only five IPOs have hit the market raising a paltry US$53.1 million. For the same period last year, US$1.1 billion was raised from eight IPOs.

Several billion-dollar IPOs were scrapped as stockmarkets got pummelled in the first quarter, including a proposed $1.7 billion real estate investment trust (Reit) by Mapletree Investments.

Another mega Reit planned by Mapletree Investments is its privately held Mapletree Commercial Trust which owns about $3 billion worth of diversified assets.

Mapletree Investments chief executive Hiew Yoon Khong told BT in a recent interview that it would launch the trust when the market stabilised, hopefully before the end of the year.

‘I agree that the IPO situation is starting to look more encouraging,’ says Mark Thornton, co-head of private equity group 3i’s Asia business.

One of 3i’s investment Franklin Offshore International is in the listing pipeline.

‘Specifically regarding Franklin, I am unable to comment,’ added Mr Thornton.

‘Liquidity is plenty in the system. Just see how the interbank interest rates continue to fall; market sentiment has improved,’ said one industry watcher.

She says that it is a matter of pricing where investors feel the returns are appropriate to the risks.

But another said that there is no clear signal that market has turned positive for IPOs.

‘The market has not worsened - we are waiting to see who will test the waters first,’ he said.

For the region, a total of US$85 billion from 234 deals are expected for the rest of 2008 - a sign of Asia’s recovery from the IPO drought experienced in the first five months of the year, Thomson Reuters said in its report on Thursday.

Year-on-year projected comparison for Asia shows estimated IPO pipeline experienced a 21.1 per cent increase compared with the corresponding period last year. This increase is a stark contrast to the 33.3 per cent decline experienced so far this year.

China and India are expected to lead the region with an estimated US$39.8 billion and US$19.7 billion, respectively. South Korea will finish strongly for the rest of the year with US$5.7 billion in pipelined deals - it has yet to issue any so far. China experienced a 5.1 per cent decrease when seen against its IPO pipeline for the corresponding period in 2007. Meanwhile, India shows strong IPO pipelined deals with a 211.9 per cent increase from the year-ago period.

By the end of 2008, total IPO volumes from Asia might reach US$103.4 billion, against US$97.8 billion in 2007, said Thomson Reuters.
Source : Business Times - 26 May 2008