Private equity players line up for Chinese-led IPO revival
September 22, 2009
By Elisa Martinuzzi and Elizabeth Hester Beijing
Carlyle Group co-founder David Rubenstein and Stephen Schwarzman, the chairman and chief executive of Blackstone Group, are counting on a new Chinese revolution, this time waged by shoppers, not peasants.
An increase in consumer spending in the most populous nation has spurred a six-month rally in Asian stock markets and encouraged a flood of initial public offerings (IPOs) in the region, ending a two-year slump.
The possibility that China may pull the rest of the world out of a recession and whet investor appetite for IPOs has private equity executives lining up to sell companies they have been forced to keep during the credit crisis.
It is also encouraging news for banks, such as Morgan Stanley, UBS and JPMorgan Chase, which could increase their market share of global stock sales.
"The expectation of growth in China is driving IPOs and drawing funds from Europe and the US," said Jason Cox at Bank of America's Merrill Lynch unit in Hong Kong. "There's optimism that Chinese domestic consumer spending will continue to grow."
Asian companies, including state-owned Metallurgical Corporation of China and Sinopharm Group, China's biggest drug distributor, have raised $12.8 billion (R95.6bn) in IPOs so far this year, almost double the combined total for the US and Europe, according to Bloomberg data.
Metallurgical Corporation, the construction company that helped build the Olympic stadium in Beijing, surged 28 percent on its debut in Shanghai yesterday.
Firms might sell $15bn more in shares in Hong Kong by year end, said Cox.
US-based Wynn Resorts planned to raise up to $1.63bn in Hong Kong by selling a quarter stake in its Macau casino assets, a source said.
IPOs worldwide next year might raise more than last year's $87.4bn, said Tom Troubridge at PricewaterhouseCoopers in London.
Still, business would not get back to the $289bn record of 2007 for another three years, he said.
Four companies in which Carlyle invests plan to hold IPOs in China and Hong Kong.
"We think it's a very attractive place to invest," Rubenstein said last week. "The growth rates are still very high there." - Bloomberg
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