Mainland Chinese banks plough into equity capital markets

Emerging capabilities from mainland banks, inflated participants in syndicates and fierce competition for fewer deals characterise domestic and international rivalry for equity capital market deals in Asia.

Regulatory restrictions have effectively suspended listings in the mainland's share market since November last year and reduced potential initial public offerings of shares, while an increasing number of bookrunners on the deals that are getting to market are complicating syndicates.

Still, deal pricing performance and trading outcomes do not appear to have suffered. In the first half of this year, 89 per cent of flotations were priced within or above their indicative range, according to an Ernst & Young review.

Tucker Highfield, the managing director and head of equity syndicate for non-Japan Asia-Pacific markets at Credit Suisse, said there was no choice but to adapt as annual issuance volume from the region fell to US$100 billion to US$110 billion last year from more than US$200 billion in 2010.

Deal size has shrunk, the number of transactions has increased and the geographic driver of deals has shifted - Southeast Asia is now the engine of issuance.

"The number of deals continues to increase and is up approximately 25 per cent year to date. IPO volumes have shrunk and there is greater focus on high quality, private sector businesses. We're all working harder to achieve the same overall issuance amount and looking beyond familiar, large issuers," Highfield said.