• 27-NOV-2012

  • By PwC

Cross-border IPO activity will remain significant - until today's emerging market exchanges become the developed markets of tomorrow

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During the ten year period (2002 – 2011):

• Cross-border IPOs accounted for 9% (1,172) of the total number and 13% (US $ 220billion) of the total proceeds raised by all global IPO activity,
• The previous decade witnessed the rise of Asian companies as originators of cross-border IPOs. Chinese companies have completed the largest number of international listings with 30% (347) of all cross-border IPOs raising $29billion.
• London and New York are the most attractive destinations for foreign issuers (480 issuers raising $110bn and 264 issuers raising $56bn respectively). However during this period, new listing venues such as Hong Kong and Singapore, outside of these traditional global capital centres, grew in significance.

These are some of the findings of PwC's and Baker & McKenzie's 'Equity sans frontieres' – trends in cross-border IPOs report, which analysed cross-border IPO data from the past ten years and polled more than 200 global investment bankers, issuers and representatives from stock exchanges.

Clifford Tompsett, capital markets partner and head of PwC's IPO Centre, said:

"Exchanges in developing markets have typically not had the depth to sustain capital requirements to support their growing economies. This has started to change. With an increasingly sophisticated capital markets infrastructure in emerging markets, there will be more opportunities for issuers to raise capital locally or regionally, beyond traditional listing centres."

Edward Bibko, capital markets partner and Head of Capital Markets, EMEA at Baker & McKenzie said,

"The development of cross border activity is a fascinating story that mirrors the broad economic, social, political and technological trends of our age. It's the story of new economic powers, the struggle of established exchanges to maintain their dominance and the new economic realities following the debt crisis. It also reflects the extent of globalisation as investors, armed with ever increasing amounts of real time data, shift capital around the world."

Regional activity:

Europe, Middle East and Africa (EMEA)

Companies within EMEA originated the highest level of cross-border IPOs, with 421 companies raising US$ 121bn. Of this, 335 IPOs raised $97bn within EMEA, compared with 74 IPOs from EMEA into the Americas raising $17bn and 12 IPOs from EMEA raising $7bn into Asia-Pacific.

London is the leading destination for cross-border IPO activity – attracting 480 IPOs raising $110bn from cross-border issuers originating from a diverse range of markets around the world. This represents 34% by number and 15% by value of the total IPOs on the London Stock Exchange, and 38% by number and 50% of all cross- border IPOs globally.

London is a preferred listing venue for Russian and CIS issuers. 104 issuers listed in London raising $53bn during the period analysed, 45 of which were Russian companies raising $39bn.


New York is the second most attractive destination for overseas issuers, attracting 264 companies to American exchanges which raised $56bn. Introduction of more onerous regulations such as Sarbanes-Oxley may have dampened the attractiveness of the US markets for cross-border issuers, with number and amount raised almost half those of London. However the recent enactment of the JOBS Act by the US government is attracting renewed interest from foreign issuers.

51% (134) of inbound issuers into the USA originated from China, raising $20bn, often through so called 'backdoor' listings. Some of these listings did not undergo the scrutiny of the normal IPO diligence and regulatory processes which contributed to a number of high-profile business and corporate governance failings.

Neil Dhar, US capital markets partner, PwC added:

"The influx of Chinese companies listing in the US has slowed in recent years as regulations about reverse takeovers have tightened. However, Chinese regulators have now allowed US oversight of audits for US-bound companies based in China. Based on these recent developments, we would expect to see an increase in the number of Chinese IPO candidates looking to list in the US."

Asia – Pacific

Asia- Pacific was the region with the highest level of outbound activity. Asian outbound activity was driven by China: 347 cross-border IPOs originated out of China, 39% of which went to the USA. Singapore is a regional hub for cross-border IPOs, the majority of which originate from either Mainland China (71% of SGX inbound IPOs, 130 issuers raising $5bn) or Hong Kong (14%, 26 issuers raising $6bn).

Clifford Tompsett, capital markets partner, PwC said:

"We were surprised by some of the findings. Most market participants will be aware of the phenomenon of Chinese companies listing in the US, but not many realise the number and activity on other markets such as Singapore and Frankfurt Another surprise was the number of US companies that listed overseas, mainly in London on the AIM market."

Outlook for the future

Last week, members of the International Organization of Securities Commissions (IOSCO) met to discuss the growing importance of emerging securities markets in the global financial system. They recognised that as these economies grow in prominence, the evolution of proper securities regulation is vital to establishing developed markets of the future.

The findings in Equity sans frontieres support this view. With robust regulation, deeper capacity and more sophisticated market infrastructure that will develop over time, these markets will become the true engine of global economic growth.

Clifford Tompsett, partner, PwC added:

"In terms of fundraising activity, the IPO market has yet to recover to pre-crisis levels, However traditional IPO indicators, such as market volatility and stock market indices, are improving."