If you were to have picked a day to price an IPO over the past 12 months, you theoretically couldnt have done much worse than Friday March 14 when Bear Stearns announced that it was having a little liquidity trouble. Yet Want Want, a Chinese snack maker, said go go and completed its $1.05 billion flotation despite what must have been a difficult roadshow. The stock slumped sharply at first but then climbed steadily. As Euromoney went to press, it was trading well above the launch price.
Investment bankers are in agreement about whats needed for deals like these to price when all around them markets are tumbling: a well-known name, an energetic and thorough roadshow, a willingness on the issuers part to accept the consequences of pressing on with the wedding despite the downpour. All of these were true of the Sony Financial Holdings IPO, launched in September when Japanese equities were severely underperforming and financial stocks were particularly sluggish. The deal has outperformed the Topix index by some 25% to 30% since listing, and the companys financing team must feel vindicated.
Theres a buzz around Asias financial hubs thats missing from New York and London at present, and the fact that deals were executed throughout the worst of the financial crisis suggests that theres plenty of business to be done whatever the global environment. Investment bankers describe their deal pipelines as full, and say that even markets that seem more or less shut such as corporate high-yield bonds need only a couple of successful issues to reopen them.
The banks are responding. The news that Credit Suisse has relocated its head of financial sponsors and head of financial institutions to Hong Kong suggests the way things are going: an internal email seen by Euromoney speaks of the importance of global talent transfers in making sure top bankers are located where the action is. In the past 12 months, Asias finest companies have spent money as well as raising it: think of Chinalco buying Rio Tinto, Indias Tata Motors buying Jaguar Land Rover, or Temasek and Ping An investing in Merrill Lynch and Fortis respectively.
Although these mega-deals can probably be served by the traditional hub-banking model in which talent jets out to the client from Hong Kong or Singapore, the rise of intra-Asian deals conducted by smaller firms in the region suggests that on-the-ground teams in Asias smaller markets will have a role to play. Banks looking to cut costs globally will then have some difficult decisions to make: with deal pipelines full and top bankers relocating to Asia, can they afford to trim headcounts in Asia and risk missing out?