Capturing the themes:
In a bumper year for Asia ECM, one bank stood out for its ability to capture key market themes and move quickly to raise funds for its clients. For leading the deals that defined the year, Morgan Stanley is IFR’s Asia-Pacific Equity House of the Year.
Morgan Stanley led the way in Asia’s equity capital markets in 2020, securing key roles on the biggest capital raisings of the year and showing its strength across a broad mix of markets and products.
Rather than freezing activity, the coronavirus pandemic triggered a wave of equity issuance in Asia-Pacific. Covid-19-hit companies rushed to raise capital while companies benefiting from the pandemic took the opportunity to build war chests.
The US investment bank topped the equity and equity-linked league table in IFR’s review period in Asia-Pacific, excluding Japan, raising US$31bn from 124 transactions.
Morgan Stanley dominated the healthcare sector, which attracted billions of dollars of investment last year as a result of the pandemic.
The US bank had an around 70% market share in equity issuance from Chinese healthcare companies. Its long-term relationship with WuXi Biologics, which it helped list in 2017, paid off with five sole-book follow-ons raising US$3.92bn, while it sponsored a total of nine healthcare Hong Kong IPOs for the likes of RemeGen, Akeso, Peijia Medical and Hygeia Healthcare.
Ping An Healthcare and Technology’s HK$7.86bn (US$1bn) primary share placement particularly highlighted Morgan Stanley’s leadership in the sector. The bank was one of three bookrunners for the online healthcare company’s first post-listing equity raising, even though it did not work on its 2018 IPO.
Chinese biotech company InnoCare Pharma’s HK$2.5bn Hong Kong IPO was even more remarkable. Morgan Stanley, as joint sponsor, brought the deal to the market in March when travel bans and lockdowns in the region made physical roadshows impossible.
The offering was the first Asian IPO to be marketed virtually and the first with an online listing ceremony. To minimise market risk, bookbuilding was compressed to three and a half days and 57% of the shares were sold to cornerstone investors to create scarcity. The stock surged 9.6% on debut.
InnoCare’s success set a template for how IPOs, especially from the healthcare sector, would be executed in a Covid-disrupted world.
Outside China, Morgan Stanley arranged SK Biopharmaceuticals’ W959bn (US$857m) IPO, the second largest since 2017 in South Korea.
Staying on top
Playing to its strengths, Morgan Stanley also managed to bring a series of Chinese technology transactions to the US market, routinely engaging investors despite heightened US-China political tensions.
“There were a lot of industries within tech that were taking a big hit because of Covid, such as food delivery and online travel agencies,” said Magnus Andersson, co-head of equity capital markets for Asia Pacific alongside Alex Abagian. “We managed to find the winners over the losers in order to capitalise on that and stay on top of the sector.”
The bank harnessed the upbeat sentiment surrounding the electric vehicle sector to help Nio raise a combined US$4.8bn from three follow-ons and Li Auto raise US$1.3bn from a US IPO. It also led the US$2.4bn US IPO of Chinese online property listing service KE Holdings in August and a US$2.05bn follow-on of the company in November, just three months later. As well as straight equity, the bank sold a US$750m convertible bond for Chinese video-streaming site Bilibili.
House bank
The real estate sector was another of the most active issuers during the year. It worked on the HK$9.2bn Hong Kong IPO of Chinese property management company Sunac Services and the HK$9.8bn Hong Kong float of Shimao Services. In India, it led the US$600m IPO of Mindspace REIT, the second REIT in the country.
India provided other highlights, including a US$3.4bn sell-down in Hindustan Unilever and a US$2bn qualified institutional placement for ICICI Bank.
The bank was also a leader in South-East Asia, acting as joint global coordinator on the Bt39bn (US$1.3bn) IPO of SCG Packaging and the Ps25bn (US$521m) IPO of Philippine internet service provider Converge ICT Solutions.
Morgan Stanley was also involved in the trend towards secondary listings for US-traded Chinese stocks. It was a joint global coordinator on the HK$101.2bn (US$12.9bn) Hong Kong secondary listing of NYSE-listed Alibaba Group Holding at the end of 2019, the first to take advantage of reforms designed to attract such listings. The experience helped the bank win sponsor mandates for the forthcoming secondary listings of US-listed Trip.com and Bilibili.
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