capital raising in asia - ibc · 29-apr-15 malakoff corp utilities bursa malaysia n.a. 1.80 fixed...

Capital Raising in Asia

PwC

Introductions

3

DirectorPwC – Capital Markets

Geoffrey Tang

E mail: [email protected].: +852 2289 1886

IPO ReadinessWhich

Market?Tax

structuring Governance and Controls

Equity and debt advisory

Accounting Advice

Advisory

Equity markets

PwC

IPO and FO activity per regionAsia-Pacific is the leading region 2015YTD in terms of IPO activity, while the Americas dominate FO activity in terms of money raised

Americas EMEA Asia-Pacific

IPO

mo

ne

y r

ais

ed

& #

of

de

als

FO

mo

ne

y r

ais

ed

& #

of

de

als

Source: Dealogic as of 1 October 2015

Note: included deals > $5m, excluding PIPO’s and transactions on Over-The-Counter exchanges. If IPOs or FOs take place in two or more regions, the total money raised is attributed to all regions

$60.5bn$71.5bn

$96.2bn$107.8bn

$36.7bn

250 222317 338

184

2011 2012 2013 2014 2015YTD

$202.8bn

$235.0bn$250.2bn

$230.2bn

$204.2bn

1,2361,031

1,162 1,143

874

2011 2012 2013 2014 2015YTD

$35.3bn

$18.0bn

$40.5bn

$81.7bn

$45.5bn

167101

180277

187

2011 2012 2013 2014 2015YTD

$92.5bn

$52.8bn$58.3bn

$83.1bn

$49.2bn

620

397 362

539459

2011 2012 2013 2014 2015YTD

$137.4bn$152.6bn $160.2bn

$182.4bn$202.9bn

1,074978

1,263 1,325

1,083

2011 2012 2013 2014 2015YTD

$133.9bn$122.4bn

$179.3bn$203.7bn

$136.8bn

624518

631728

567

2011 2012 2013 2014 2015YTD

PwC

Money raised via IPOs and FOs in the Asia-Pacific regionIPO activity in the Asia-Pacific region was relatively weak in Q3, with money raised being only €7.0bn as compared to €28.5bn in Q2

Money raised via IPOs and FOs in the Asia-Pacific region (10-year overview) Top countries 2015YTD


China, 49%

Hong Kong, 20%

Australia, 8%

Thailand, 7%

Japan, 5%

Other, 11%

China, 32%

Hong Kong, 28%

Australia, 14%

Japan, 9%

India, 8%

Other, 9%

IPO

mo

ne

y r

ais

ed

& #

of

de

als

FO

mo

ne

y r

ais

ed

& #

of

de

als

$89.6bn $85.2bn

$30.2bn

$68.3bn

$175.2bn

$91.0bn

$51.3bn $48.2bn$66.1bn

$45.1bn

$6.5bn $8.0bn

$1.6bn

$2.5bn

$8.0bn

$1.5bn

$1.5bn $10.2bn

$17.0bn

$4.1bn

604697

301 325

760620

397 362

539459

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015YTD

Asia Australasia Number of IPO's

$101.1bn$148.1bn

$63.7bn

$183.5bn$206.8bn

$113.8bn $135.1bn $139.6bn $160.1bn $173.1bn$28.8bn

$37.8bn

$35.4bn

$63.5bn $23.5bn

$23.5bn$17.6bn $20.7bn

$22.3bn$29.8bn

1,056

1,437

650

1,381 1,3501,074 978

1,263 1,3251,083

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015YTD

Asia Australasia Number of FO's

Note: included deals > $5m, excluding PIPO’s and transactions on Over-The-Counter exchanges. If IPOs or FOs take place in both Asia and Australasia, total money raised is attributed to both regions. Top countries have been selected based on money raised in 2015YTD. If IPOs or FOs take place in two or more countries, total money raised is attributed to all countries.

PwC

Leading transactions year-to-date in the Asia-Pacific regionChinese companies listing on Shanghai Stock Exchange or HKEx dominate IPO league tables with six of the top seven transactions

Top 10 largest IPOs 2015YTD in the Asia-Pacific region

Top 10 largest FOs 2015YTD in the Asia-Pacific region

Pricing

dateIssuer name

Issuer

countrySector Exchange Filing range

Offer

pricePricing

Money

raised

Free

float

Secondary

shares (%)

Performance

1-day 1-month Current

17-Jun-15 Guotai Junan Securities Financials Shanghai SE N.A. 19.71 Fixed price $4.9bn 20.0% 0.0% 44.0% 44.1% -5.6%

01-Jun-15 China National Nuclear P. Utilities Shanghai SE N.A. 3.39 Fixed price $2.2bn 25.0% 0.0% 44.0% 166.1% 167.6%

19-Jun-15 Legend Holdings Technology HKEx 39.80 - 43.00 42.98 Top of range $2.0bn 15.1% 0.0% -0.1% -18.9% -37.7%

03-Feb-15 Jasmine Br. Int. Gr. Fund Technology Thailand SE 10.00 - 10.50 10.00 Bottom of range $1.7bn 54.3% 0.0% -3.0% -4.5% 5.0%

10-Mar-15 Orient Securities Financials Shanghai SE N.A. 10.03 Fixed price $1.6bn 18.9% 0.0% 44.0% 237.6% 63.2%

31-Jul-15 China Railway S. & C. Industrials HKEx 6.30 – 8.00 6.30 Bottom of range $0.9bn 20.5% 0.0% 0.3% -6.4% -1.0%

19-Jun-15 Red Star Macalline Group Financials HKEx 11.18 - 13.28 13.28 Top of range $0.9bn 15.0% 0.0% -4.1% -16.4% -25.5%

05-Mar-15 HKBN Technology HKEx 8.00 - 9.00 9.00 Top of range $0.9bn 73.7% 100.0% 0.0% 8.7% -0.7%

05-Jun-15 3SBio Health Care HKEx 8.30 - 9.10 9.10 Top of range $0.8bn 28.8% 20.0% 2.8% 2.8% -13.6%

29-Apr-15 Malakoff Corp Utilities Bursa Malaysia N.A. 1.80 Fixed price $0.9bn 31.2% 34.3% 0.0% 0.6% -10.0%

Pricing

dateIssuer name

Issuer

countrySector Exchange Filing range

Offer

priceDeal type

Money

raised

Secondary

shares (%)

Performance

1-day 1-month Current

22-May-15 Huatai Securities Financials HKEx 20.68 - 24.80 24.80 Fully Marketed $5.0bn 0.0% 4.8% -11.7% -38.5%

28-May-15 Inn. Mon. Baotou St. Un. Basic Materials Shanghai SE 3.61 - 3.61 1.80 Cash Placing $4.9bn 0.0% 252.8% 195.6% 97.2%

15-May-15 Haitong Securities Financials HKEx 15.62 - 15.62 17.18 Cash Placing $4.2bn 0.0% 32.7% 39.7% -35.0%

31-Mar-15 GF Securities Financials HKEx 15.65 - 18.85 18.85 Fully Marketed $4.1bn 0.0% 34.8% 27.3% -25.7%

30-Jan-15 Coal India Basic Materials BSE; NSE 358.00 - 358.00 357.13 Accelerated Bookbuild $3.7bn 100.0% -0.6% 10.7% -8.6%

30-Mar-15 Caltex Australia Oil & Gas ASX 34.20 - 34.20 35.00 Bought Deal $3.7bn 100.0% -1.6% 2.1% -10.6%

15-Jun-15 CITIC Securities Financials HKEx 27.75 - 27.75 24.60 Cash Placing $3.5bn 0.0% 19.1% -9.2% -43.9%

21-Apr-15 Sun Pharmaceutical Ind. Health Care BSE; NSE 930.00 - 1,043.80 930.00 Accelerated Bookbuild $3.2bn 100.0% 4.1% 5.5% -6.6%

27-Apr-15 China Galaxy Securities Financials HKEx 11.99 - 11.99 11.99 Cash Placing $3.1bn 0.0% 2.9% 14.1% -54.6%

12-May-15 Industrial Bank Co Ltd Financials Shanghai SE 17.68 - 17.68 17.68 Accelerated Bookbuild $2.8bn 100.0% 3.9% 13.4% -17.7%


Note: included deals > $5m, excluding PIPO’s and transactions on Over-The-Counter exchanges. Country indicates the company’s Country of domicile. Sector classification is based on the Industry Classification Benchmark (ICB).

PwC

IPO and FO activity per sector in the Asia-Pacific regionMulti-billion FOs spur money raised by Financials; Technology companies display increasing activity in terms of money raised since 2013

Money raised and number of IPOs and FOs per sector 2013 – 2015YTD in the Asia-Pacific region

IPO

mo

ne

y r

ais

ed

& #

of

de

als

FO

mo

ne

y r

ais

ed

& #

of

de

als

Note: included deals > $5m, excluding PIPO’s and transactions on Over-The-Counter exchanges. Sector classification is based on the Industry Classification Benchmark (ICB). Financials include Closed-End Funds and Real Estate.

IndustrialsBasic

MaterialsHealth

CareTechnology

Consumer Goods

Financials Oil & GasConsumer

ServicesTelecom-

municationUtilities

Source: Dealogic, Bloomberg as of 1 October 2015

13.8 13.8

22.4 23.115.7 19.1

15.010.0

15.1

55.5 58.180.6

8.0 6.514.2

19.8

46.3

27.0

8.5 10.7 9.3 6.1 8.4 6.30.9

6.20.9

9.6 6.6 8.0

155 168122

151 168139 133 131 123

277 283 252

10175 83

239

275

218

69 5730

92 10882

7 27 1039 33 24

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

1.23.6 2.7

8.7

13.2

4.88.1 8.7

3.4

22.2 22.0

13.6

1.7

6.54.5

7.3

15.1

8.2

2.91.0 0.7

2.84.9

6.9

0.2 0.23.5

7.9

4.1

2137 47 50

9882

5678

58

8872

5025

40 4367 132

114

16 10 631

6147

3 3 8 8 9

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

'13 '14 '15YTD

PwC

Top countries in terms of IPO activity in the Asia-Pacific regionAfter China was set for a record year in terms of IPO activity, the government halted IPO activity in order to stabilise the falling equity market...

IPO activity of top countries in the Asia-Pacific region 2011 – 2015YTD


$31.5bn

$8.0bn

$18.9bn

$28.7bn

$9.9bn

7755

92 10866

2011 2012 2013 2014 2015YTD

$42.0bn

$14.5bn $12.9bn

$24.0bn

271

142 126

192

2011 2012 2013 2014 2015YTD

$1.4bn $1.5bn

$10.0bn

$16.7bn

$4.1bn

5125

5072

44

2011 2012 2013 2014 2015YTD

$0.3bn $1.8bn

$6.7bn$2.8bn $3.2bn

6 23 34 3717

2011 2012 2013 2014 2015YTD

Note: included deals > $5m, excluding PIPO’s and transactions on Over-The-Counter exchanges. If IPOs or FOs take place in two or more countries, the total money raised and number of IPOs is attributed to all countries. Top countries have been selected based on the money raised in 2015YTD.

PwC

Asian market structures differ from those in the WestHong Kong and China markets have a high degree of retail participation, Hong Kong in particular has a diverse equity pool

Investor demand and asset allocation

8

UK. 45%

North America. 27%

Asia Pacific. 11%

Lat America. 1%

EMEA (ex-UK). 16%

London

UK. 4%

North America. 78%

Asia Pacific. 10%

Lat America. 1%EMEA (ex-UK). 7%

US

China. 32%

North America. 5%Asia Pacific (ex-China). 56%

Lat America. 2%

EMEA. 5%

Hong Kong

1,143

450

786

-

200

400

600

800

1,000

1,200

London Hong Kong NASDAQ

US

D b

illio

ns

Equity AUM held in international portfolios

Source: Bloomberg, London Stock Exchange, PwC Analysis

19%

39%26%

81%

61%67%

0%

25%

50%

75%

100%

London Hong Kong NASDAQ

Investors by type

Retail Institutional

PwC

China’s optimal assets reallocation has major room to expand to the level of market capitalisationExpect continued growth in equities once reforms in place to drive Asia-Pacific markets

8

0

16

22

2

15

4 3

18

-

5

10

15

20

25

Mainland Hong Kong US

US

D t

rill

ion

s

GDP Total assets of banks and insurers Total securities market capitalisation

PwC

Asia-Pacific average daily turnover lags the US markets, but has potential to substantially increaseHong Kong in particular should benefit from the opening of China’s capital account

11

123

72

52

6 3

15

8 6

22 19

7

25

6 4 3 3 1 -

20

40

60

80

100

120

140

US

D b

illio

ns

167%

77%

51%

62%71%

58%

54% 75%

317%

171%

48%

122%

106%55% 78% 46%

36%

PwC

Hong Kong likely to continue to attract international companies wishing to raise equity capital through secondary offerings, or spin offs of China businesses

11

Asia/China Nexus

Critical Mass of World's Leading Brand Names

Alignment of Issuers' Growth

Drivers and Shareholders

Transparent and Efficient

Listing Regime

Diversivied and Global Investor

Base

Debt markets

PwC

Debt issue methods

Private1 Public2

Advantages • Rapid issue time• Lower issue costs for

small offerings• Easier to renegotiate

terms

• Larger issue size• Liquid secondary

market

Disadvantages • Limited liquidity• May contain

restrictive covenants• Higher coupon

• Higher issue costs• Additional

compliance

Lower issue costs vs higher coupon?

1 Private bonds are traded over the counter (OTC); 2Public bonds are listed on a stock exchange

In recent years, there has been a high degree of convergence in the requirements of listing venues and market expectations for bonds which are not listed, and therefore do not need to comply with any Stock Exchange listing rules.

Larger issues benefit from increased liquidity from bond funds and funds of funds.

Disclosure previously determined by reference to listing requirements but now largely informed by international market practice and standards.

The other key factor to consider when issuing debt is selecting the appropriate currency for issue as this will impact issue location, demand and pricing.

7

Quarterly ECM Briefing

PwC

Debt in Hong Kong

• The bond market in Hong Kong has for some time been a significant market place for issuers and investors, in both domestic and foreign currencies. The range of product offerings, the open access for issuers and investors, both domestic and international, and the increasing significance of offshore RMB bond issuances make Hong Kong one of the most frequented international bond markets in Asia.

• International investors are free to invest in debt instruments issued in Hong Kong. There are no restrictions on foreign borrowers tapping the domestic debt market to finance their business.

• The majority of debt issued in Hong Kong is issued privately to institutional investors, however, marketing is essential for non-household names as Asian investors do not look at European or US credits on a regular basis

• The HKEx sets out a simple “threshold” disclosure standard, namely that the listing document must contain such information that a professional investor would customarily expect it to contain and these standards are generally followed, even for unlisted debt.

15


PwC

Debt in Singapore

• Singapore has one of the most developed bond markets in Asia of which about two-thirds is in SGD and the rest mostly in US dollars.

• The Singapore bond market is fully accessible to all issuers and investors globally. There are no capital controls, hedging restrictions, or withholding taxes. As a result, the market’s profile is international in nature, with foreign entities accounting for more than a quarter of bond issuance.

• All bonds issued in Singapore must be listed on the SGX. However, the disclosure obligations for bonds issued to professional investors are relatively standard and the listing process is rapid.

16 16


PwC

Comparison of market structures

Hong Kong Singapore Europe US (144A)

Market structure

• Listed (5%)• Private (OTC) (95%)

• Listed only • Listed only • Private (OTC) (professionalinvestors only)

Listing platform • Hong Kong Stock Exchange (HKEx)

• Singapore Stock Exchange (SGX)

• Irish Stock Exchange• Luxembourg Stock Exchange• London Stock Exchange

• PORTAL

Key currencies • HKD, RMB, USD • USD, SGD • USD, EUR, GBP • USD

Applicableregulations

• HKEx Listing Rules.• Securities and Futures

Ordinance

• SGX Listing Manual• Securities and Futures Act

and its regulations.• Monetary Authority of

Singapore Act• Companies Act

• European Prospectus Directive

• Markets in Financial Instruments Directive (“MiFiD”)

• Rule 144A• Generally market participants

expect the same standards to be applied as registered offerings although not required

Language of documentation

• English or Chinese • English • English • English

Considerations • More familiarity with Chinese issuers

• Quickest time to market• Lower liquidity

• Less familiar with Chinese issuers which may impact pricing

• Annual Report and Accounts required to be published within six months of year end for London listing

• Additional compliance with MiFiD

• Can execute 144A offering combined with an offering in any of the other markets

• Additional legal cost as lawyers will be expected to issue a 10b5 opinion on the offering circular

16


PwC

Typical order book distribution for Asian debt

• Hong Kong and Singapore investors drive demand – roadshow is important for non-Asian credits.

• European investor base growing as the appropriate infrastructure is put in place.

• All bond offerings issued under Reg S restricting marketing to outside the US.

68%

13%

15%

3% 1%

Fund Managers

Private Banks

Banks

Insurance

Corporates

54%28%

16%

1%

Hong Kong

Singapore

Europe

Other

Geography Type

12


PwC

G3 issuance is driven by corporates issuing USD denominated debt, generally under a 5 year tenor or less

19


China

Hong Kong

India

Indonesia

Korea

Malaysia

Philippines

Singapore

Others

G3 New Issues by Country 2015 YTD

0%

21%

1%

34%

3% 3% 0%

25%

2%

6% 4%

G3 New Issues by Tenor 2013-2015 YTD

Source: Bloomberg; Data excludes Japan

Issuer Location Rating Currency Size Coupon Tenor

ICBC Mainland China A1/A/NR USD 2,000 4.88% 10 years

Swire Pacific Hong Kong A3/A-/A- USD 500 3.88% 10 years

Geely Automobile Mainland China NR/A/NR USD 300 3mL+170bps 5 years

Weichai Power Mainland China NR/BBB/BBB USD 400 4.13% 5 years

PwC

Offshore Renminbi (“CNH”) is generally shorter tenor due to financial institutions although longer maturities are available34% of CNH debt has been issued by global firms over the last four years

20


96

12

39

3

7

5

0

1

2

3

4

5

6

7

8

-

20

40

60

80

100

120

InvestmentGrade

High Yield Not rated

By Credit Rating

Number Average Coupon

105

22

9 7

4

4

4 4

5

4

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

-

20

40

60

80

100

120

1-3 years 3-5 years 5-7 years 7-10 years 10+ years

By Tenor


49

7

42

49

5

5

5

3

0

1

2

3

4

5

6

-

10

20

30

40

50

60

Industrial Utility Finance Others

By Issuer Type


Source: Bloomberg

PwC

Summary

• Asia’s equity capital markets are dominated primarily by Mainland China and Hong Kong

• Deep pool of investor capital is held in Hong Kong and Singapore

• Regulatory changes are likely to benefit Hong Kong’s equity markets in the medium-term (China reform of IPO process and Stock Connect programmes)

• Other equity markets mainly have a domestic focus (e.g. Japan, Taiwan, Australia)

• Asian debt markets lead by Hong Kong and Singapore

• Onshore Renminbi debt market remains relatively inaccessible to general corporates

• Offshore Renminbi remains an accessible financing option

21


capital raising in asia - ibc · 29-apr-15 malakoff corp utilities bursa malaysia n.a. 1.80 fixed...

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