Tapping into the US market

Transcription

1 Tapping into the US market Lance Chen, Partner - Head of US Securities, Baker & McKenzie (Chair) Yilong Du, executive director, Goldman Sachs Yulanda Tang, Senior Manager, PwC Jonathan Barkey, Senior Vice President and Counsel, Citi 2014 Baker & McKenzie 1 Tapping into the US market 4 December, 2014 Lance Chen Principal, Shanghai 1

2 Cross-Border Listings 2012 and 2014 We commissioned mergermarket to survey 200 corporate executives and investment bankers familiar with cross-border listings 3 Key themes 4 2

3 Key themes Survey findings include: Both emerging and developed markets find cross-border listings attractive Mid-caps dominate Liquidity and opportunism drive cross-border listings No single stock exchange is right for all companies On-the-ground expertise is paramount 5 Liquidity is king Corporate respondents top three reasons for choosing to list on a particular foreign exchange relate to market liquidity: 98% 92% 83% 6 3

4 but it s not everything Benefits of listing abroad, according to corporate respondents. 78% 60% 38% 36% 35% 26% Increased liquidity Timing of offering Fewer disclosure requirements Simpler accounting Fewer listing requirements Reduced transaction costs 7 No one Stock Exchange is the answer Respondents top exchanges for meeting specific desired goals: ACCESS TO NEW INVESTORS VISIBILITY / MARKETING FUTURE ACCESS TO CAPITAL INCREASED LIQUIDITY COMPARED TO HOME MARKET RAISING CAPITAL ASX NYSE TSX TSX LSE TSX LSE ASX HKSE NYSE FSE HKSE 8 4

5 No one stock exchange is the answer INDUSTRY TOP EXCHANGES BY NUMBER OF LISTINGS #1 #2 #3 Technology, Media & Telecommunications Shenzhen ChiNext NASDAQ NYSE Metals & Mining ASX HKSE Shenzhen SME Energy & Power NYSE ASX HKSE Consumer Products & Services LSE-AIM Shenzhen SME HKSE Financial Services LSE NASDAQ NYSE Industrials Shenzhen SME Shenzhen ChiNext HKSE Healthcare & Pharmaceuticals NASDAQ Shenzhen ChiNext Taiwan OTC Building, Construction & Engineering Shenzhen SME HKSE BSE Real Estate NYSE HKSE SGX Number of listings, including dual listings, from January 1, 2008 through December 1, Source: Thomson Reuters. 9 On-the-ground expertise is paramount Factors respondents found most important when choosing their financial, legal and accounting advisers: 98% 71% 59% 10 5

6 The global picture Cross-border IPOs surged in the first half of 2014 Domestic IPOs increased by 29% in the first six months Cross-border IPOs grew by more than 151% in value, raising a total of US$25.7 billion in 102 listings Companies increasingly looking beyond their domestic markets and traditional financing centers Tap deeper pools of capital Access more sophisticated investor bases Compete against peer companies 11 Cross-Border IPO Index Track the flow of cross-border IPOs through our Cross-Border IPO Index Semiannual scoring and analysis of cross-border IPO activity relative to overall IPO activity Global index score grew to 32.7 as compared to 22.0 in the same period last year 12 6

7 Regional Comparison 13 7

8 The US Companies raised US38.1billion in 57 cross- border IPOs in US in the first half of 2014, a 601 % increase over capital raised during the same period last year _ Growth driven by favorable economic conditions and steadily rising stock markets in the region The top US cross-border IPO by capital raised was Alibaba in New York followed by JD.com, Inc., on NASDAQ Retail, financials and high technology are the top three industries for capital raised in US cross-border IPOs 15 The US Growth supported by a steady stream of Chinese companies listing on NASDAQ and the NYSE Even before Alibaba, US exchanges saw ten Chinese issuers raise US$3.5 billion in cross-border IPOs and deliver aftermarket performances that outperformed the Dow Jones Industrial Average These factors resulted in the region s index score increasing to 23.8 in the first half of 2014 as compared to 13.4 in the same period last year 16 8

9 The lure of the US First nine months of 2014, saw more cross- border listings into the US than the whole of 2013 China, Israel and European companies choosing to list on NASDAQ or NYSE The US has seen 51 cross-border IPOs which raised US$37.0 billion accounting for 23% of deal numbers and 48% of proceeds in 2014 and is now outpacing the UK and Hong Kong for overseas listings Familiarity with US accounting regulations, strength of its markets, access to capital and success of Alibaba IPO are likely to encourage more cross-border IPOs on US exchanges Source : EY Global IPO Trends 2014 Q3 17 Asian companies listing in the US, 2014 Issue Date Issuer Name Domicile Nation TF Macro Industry Proceeds amount including overallotment sold in this market ($ Mil) Exchange where issue is listed 9/18/2014 Alibaba Group Holding China High Technology 25, New York Ltd 5/21/2014 JD.com Inc China Retail 2, Nasdaq 3/25/2014 Nord Anglia Education Inc Hong Consumer Products and New York Kong Services 4/16/2014 Weibo Corp China High Technology Nasdaq 5/15/2014 Jumei Intl Hldg Ltd China High Technology New York 5/7/2014 Cheetah Mobile Inc China High Technology New York 10/9/2014 MOL Global Inc Malaysia High Technology Nasdaq 4/8/2014 ikang Healthcare Group China Healthcare Nasdaq Inc 4/2/2014 Tarena International Inc China High Technology Nasdaq 11/17/2014 ehi Car Services Ltd China Consumer Products and Services New York 18 9

10 The US surge - will it last? A slowdown in US cross-border IPOs appears unlikely in the short-term BUT Warning Signs Use of VIE structures (Variable Interest Entity) has drawn attention from the Securities and Exchange Commission (SEC) and the People's Republic of China (PRC) Regulators question whether VIE structures - which allow for foreign investment in Chinese companies - are legal in China Alibaba Group, which relied on a VIE structure when listing on the NYSE, noted in its filing that, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, rules and regulations Scrutiny surrounding the legality of VIE structures may reduce investor appetite for Chinese IPOs listed in US 19 The US surge - Will it Last? Warning Signs US exchanges continue to be a highly desired destination for Chinese companies. It is important to evaluate the company's corporate structure Certain corporate structures may create risk for both companies and investors In 2015, analysts predict the opening of the Shanghai- Hong Kong Stock Connect will further bolster investor confidence in domestic listings and slow the growth of cross-border lpos While there is little doubt Asia Pacific will be a driving force for cross-border IPOs, domestic IPOs may take on a more prominent role for companies seeking to raise capital in the region 20 10

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12 23 Questions? 24 12