Cross-Border IPO Index Sees Effects of Global Uncertainty

Cross-Border IPO Index

Baker McKenzie releases 2016 Cross-Border IPO Index.

Baker McKenzie’s Cross-Border IPO Index rose by 16 percent to 32.3 for 2016, as cross-border deals gained a larger share of new equity deals this year.

The Index analyzes data by region and industry, as well as by exchanges and private equity. It is calculated as a weighted average of three components of IPO activity data: the amount of capital raised, number of IPOs and number of issuer home jurisdictions involved.

“The story of 2016 is geopolitical instability, particularly as the world waited on the results of the UK referendum and US elections, along with weak economic performance in key jurisdictions, resulting in weaker investor appetite,” said Koen Vanhaerents, global head of capital markets at Baker McKenzie. “Investors have been conservative, rewarding realistic pricing and seeking as much certainty as possible.”

Added Amar Budarapu, North America Head of Capital Markets at Baker McKenzie, “North American exchanges are clearly venues of choice for cross-border megadeals. 2016 has been marked not by economic concern but political uncertainty. Markets have moved higher since the election based on pro-business sentiment and if rate increases come in 2017, equity capital raising could become more attractive.”

A few highlights from the report:

  • Issuers raised $30 billion from cross-border IPOs in 2016 through 109 deals.
  • Total deal value fell 25 percent on the prior year but proved less volatile than domestic IPOs, which fell by 47 percent to $56 billion.
  • Cross-border deals accounted for 35 percent of new IPOs.
  • Eight out of the top 10 cross-border listings by value in 2016 were on the Hong Kong Stock Exchange, with two on the New York Stock Exchange. All ten were by Asian issuers.
  • The average amount of capital raised by a cross-border IPO in 2016 was $276 million, compared to $160 million for a domestic listing.

Read the full report.