Market slump casts pall over new offerings
US$10 billion of share sales in Asia at risk, but Macau Legend and New World to pursue plans
Slumping stock markets are threatening to disrupt as much as US$10 billion of initial public offerings across Asia, as companies from Suntory Holdings to Macau Legend Development prepare listings.
Companies are gauging demand or taking orders for as much as US$2.5 billion of initial share sales in Southeast Asia and US$2.3 billion of deals in Hong Kong.
Suntory is seeking to raise as much as US$4.7 billion this month in Japan's largest first-time share sale since September last year.
With Asia's benchmark stock index wiping out the year's gains, some companies marketing their share offerings may be forced to accept lower valuations or delay listings.
Hopewell Hong Kong Properties scrapped a HK$5 billion offering on Thursday, while China Harmony Auto plunged 16 per cent in the worst Hong Kong debut since February last year.
"We are going to need some stability in the market to get a lot of the pipeline done," said Stuart Mackay, the head of equity capital markets for Southeast Asia at UBS. "It gets tougher to do deals with the markets moving around like they have for the last two weeks."
The MSCI Asia Pacific Index is down almost 10 per cent from its May 20 high, meeting some investors' definition of a correction. Meanwhile, Japan's stock benchmark has fallen more than 20 per cent from recent highs.
Until now, companies had raised US$19.3 billion in the region this year, up 17 per cent from the same period last year. But gyrating markets are putting a recovery in the listings market in Asia at risk.
The biggest deal under way is the sale of Suntory's non-alcoholic beverage business, set to be priced on June 24. The company, Japan's second-largest drinks maker, will set a price range for the stock on Monday after flagging a tentative price of 3,800 yen (HK$310).
"Suntory will have to lower the price, and it will carry out the listing," said Kazumi Tanaka, an analyst at DZH Financial Research.
Suntory was not considering delaying or scrapping the listing of Suntory Beverage & Food, said a company spokeswoman.
Hopewell Properties was Hong Kong's biggest casualty of an equities sell-off since May last year, when Graff Diamonds dropped plans for a US$1 billion offering amid slumping markets.
Hopewell cited "significant deterioration in market sentiment" and "volatile market conditions" as reasons for pulling the deal.
CAA Resources, an iron ore producer in Malaysia, postponed its HK$691 million offering on Thursday.
But Macau Legend, the casino operator headed by former Macau lawmaker David Chow Kam-fai, is pushing ahead with a sale that may raise as much as US$788 million, people familiar with the matter said.
New World Development is also proceeding with a US$700 million spin-off of its local hotels, people with knowledge of the deal said. New World would set a price range on Monday, the people said.
Macau Legend is taking orders for shares at a range of HK$2.30 to HK$2.98 each, according to a sale document.
Both companies aim to complete the deals this month.