The evolving A-share experiment

After a solid start to 2007, the ECM market has been thrown into disarray as the sub-prime meltdown hit equity markets hard through August. With most markets taking their usual holiday breather, the true impact of increased volatility and investor nervousness will not become apparent until later in the year. Pipelines remain in tact, although ECM bankers who were quick to shrug off the wider impact of the late February correction, are facing what should be their busiest time of year with some trepidation. Global equity issuance volumes were...

Since 2005, Russian and CIS equity capital markets have developed beyond recognition. Bankers concede that while the pipeline has always been reasonably visible for the largest deals, none would have dreamed that activity could grow at the rate it has. More importantly none had expected buyside appetite to grow at a commensurate rate. Yet demand has supported the huge growth in activity with sectoral investors piling into Russian deals alongside emerging market specialists, to the point where banks find it difficult to identify which fund types...

More than a year after the groundbreaking Amsterdam listing of KKR Private Equity Investors (KKR PEI), permanent capital has come into question for a variety of reasons including poor aftermarket performance and difficult primary execution. Many have traded at discounts to NAV, some have been forced to buy back shares, and one has been wound up, highlighting the sometimes temporary nature of so-called permanent capital. Many that were queuing up for access to permanent capital in KKR's wake, are now reconsidering given the high costs and...

Annual consumption of ethanol in the US has increased by 2bn gallons to 6.5bn since the US government introduced favourable legislation in 2005 in an effort to induce production. Demand is expected to increase further with the implementation of standardised blends for the fuel additive, with a stated target of producing 36bn gallons by 2022. It was this promise that drove enthusiasm for a wave of initial public offerings in the summer of 2006. VeraSun Energy, the second-largest producer behind Archer Daniels Midland, had little trouble...

Property has been an increasing component of ECM volume since 2004. At that point deals such as the IPO of Fadesa Immobiliaria in Spain and the emerging market offerings of Globe Trade Center in Poland and Open Investments in Russia gained a very positive response from investors. Real estate has since grown rapidly with banks bringing a steady stream of offerings, mostly from Western Europe. In 2006, real estate accounted for 11% of EMEA equity issuance over US$50m. In the first half of 2007 it increased further to total 15% and solidifies...

After living with the threat, US companies with net-share settle convertibles have come to the realisation that they will most likely have to account for both the debt and equity portions of the bond separately beginning January 1 2008. While bifurcation was largely expected and adoption will bring US accounting standards in line with those of the rest of the world, the short-term impact is dramatic and will challenge originators to come up with alternative solutions. Net-share settled convertibles, or cash-par settle, allows issuers to account...

Brazil was always referred to as the “country of the future.” For Bovespa, the Brazilian stock market, that future is now. In just four years, Bovespa has made it from the sidelines into a pre-eminent listing venue and is quickly becoming one of the hottest targets for growth capital in the world. It is staggering to consider how rapidly the exchange has grown. In July 2003, a mere US$3.7bn in stock trades were completed on Bovespa and the exchange had a total market capitalisation of US$161bn at the time. The total value of listings now stands...

Since stock exchanges began to float 20 years ago, the issue of consolidation has never been far away. The need to satisfy their shareholders, as well as their users, has made life much more complicated for exchange managers. The major exchanges have always had a regular dialogue, and recent years have seen more cooperation agreements as a response to globalisation. The first significant merger in the sector, the tie-up between NYSE and Euronext in 2006, has led to many exchanges scrambling to find partners in a bid not to be left behind. US...

The lines between public and private equity have blurred in recent years. The advent of alternative listing venues targeted at institutional investors have further obscured those lines by enabling private-equity firms and alternative asset managers to sell stakes in themselves without the headache of a traditional public listing. The importance of trading platforms developed by Goldman Sachs, Nasdaq and others, have arguably been enhanced by regulatory scrutiny of the industry and recent market volatility. While private companies have been able...

There is no disputing the success of AIM since inception in 1995. The real growth, however, began in 2004 when admissions leapt from 162 to 355. The amount of money raised, both from IPOs and follow-on offerings, has also grown substantially. In 1995 flotations raised £514m, rising to £9.9bn for 2006. Secondary offerings, which are possibly a greater demonstration of the faith that investors have in a market, grew from £302m to £5.7bn over the same period. Overseas companies have played a large part in that growth, particularly over the past...

When the qualified institutions placement (QIP) was introduced to Indian equity markets in May 2006, many market participants expected it to spell the demise of the depositary receipt. So far this year, however, a whopping 62% of the US$18.2bn raised by Indian issuers in equity markets has come from offshore. The sheer volume of equity issuance year-to-date – the largest amount in the past decade – is a sign that Indian capital markets have arrived. Buoyant offshore issuance this year has been underpinned by a handful of large-scale ADS follow...

What a difference a year makes. After a frenzied 2006, Japan equity issuance is down almost 60% in 2007, global convertible issuance is down 60% and moving strike convertible bond (MSCB) issuance is down a staggering 95%. A sea change in conditions has battered public market issuance but has also resulted in a bonanza for private structured deals. One after another, banks have announced complicated and highly tailored deals including Resona Holdings’ ¥350bn (US$2.93bn) preference offering, Liberty Global’s ¥86.4bn block trade, Goodwill...