Strong financial markets, investor appetite and liquidity are set to make December unusually warm for fundraising activity in Asia after already clocking a record this year with $355.4 billion raised, according to financial advisors.
The first four days of December saw 43 deals in Asia raise $12.7 billion, Refinitiv data showed, three times the amount of the same period last year, with Hong Kong and China accounting for the biggest share.
At least $3 billion worth of initial public offerings (IPOs) are likely to be finalised in Hong Kong in December, according to bankers working on those deals.
Those transactions will further bolster this year’s all-time high, which so far represents a 56.3% increase over the same period last year, and will eclipse the previous record of $306.2 billion in 2010, Refinitiv data showed.
The Asia capital raising rush is a major fee earner for investment banks in the region which could help offset a decline in income in other key areas of their businesses around the world.
“Stocks in November have had one of the best months ever and we are seeing sustained inflows into global equities,” said William Smiley, co-head of equity capital markets in Asia ex-Japan at Goldman Sachs.
“With significant demand for emerging markets and China growth, Asia is at the heart of that activity.”
Travel restrictions due to the COVID-19 pandemic have also resulted in executives and bankers in regional hubs such as Hong Kong cancelling traditional December and January holiday plans, meaning there has been no slowdown in deals.
“There are still sizeable transactions going on and it seems there will still be quite a bit of activity well into December,” said Herbert Smith Freehills China managing partner Matt Emsley, adding there was “a solid pipeline” going into next year.
An equity capital markets banker at a Wall Street lender in Hong Kong said there was no doubt the run will be sustained at least until year-end.
“There’s no such thing as a weekend at the moment,” said the banker. One lawyer said Saturday evening phone calls with directors were now common ahead of deals launching early the following week.
Smartphone maker Xiaomi Corp raised $3.91 billion in an equity top-up placement and convertible bond sale last week, the largest deal of its type ever carried out in Hong Kong.
JD Health International Inc also raised $3.5 billion in Hong Kong’s largest IPO of 2020 last week.
“If people were hoping to put their feet up and catch their breath in these final weeks of the year, I’m not sure we’re going to get that opportunity,” said Ryan Holsheimer, JP Morgan head of cash equities and equity distribution for Asia Pacific.