Asia’s IPO market looses steam
August 11th, 2008 - by Nazia Vasi
(Click on image to view report)
Initial Public Offering (IPO) activity in the Asia-Pacific region has nearly halved in the first half of this year, with India and China reporting a drop of nearly US$18 billion in mobilization of such deals.The total capital gathered by India Inc through IPO’s in the first half of 2008 stood at US$4.07 billion as compared to US$7.68 billion during the same period in 2007, global accounting and consulting firm Grant Thornton told the Economic Times.
At the same time, data by another deal tracking firm Dealogic said IPOs by Chinese issuers have raised US$15.5 billion through 103 deals so far this year, nearly half of the amount raised in the corresponding period a year-ago - US$29.5 billion.
“This mirrors the wider Asia Pacific trend where issuance decreased 47 percent to US$28.2 billion by way of 330 deals,” Dealogic added.
Market trackers say the decline in IPO activity this year is mostly due to sharp market corrections. While the Shanghai Stock Exchange Composite Index plunged 47.82 percent, the Bombay Stock Exchange benchmark index Sensex lost as much as 29.23 percent in the first half of this year.
“The decline in IPO activity is largely because of the current bearish trend in market condition. Equity markets have tanked so much that companies do not get good valuations.
“In such a scenario, IPOs don’t even get fully subscribed and in some cases these firms have withdrawn or deferred their IPO plans,” Ashika Stock Brokers’s Research Head Paras Bothra said.
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