Cross-border IPOs flourish
With big names including Dropbox ($869m) and Chinese online streaming platform iQIYI ($2.3bn) coming to market in late March, 2018 saw the highest Q1 volume for US-listed IPOs ($17.2bn via 51 deals) since 2008. That year, volume reached $24.2bn via 25 deals in Q1, pushed up by Visa’s then-record $19.7bn IPO.
Of the 51 companies listing in the US last quarter, 14 were from outside the US, raising a total of $6.9bn. These non-US companies are becoming more significant. Between Q1 2013 and Q3 2017, non-US companies accounted for a quarterly average of 21.3% of all US-listed IPO volume; that jumped to 44.3% in Q4 2017, and has remained high at 44.1% this Q1.
To list or not to list in the US
One of the reasons for foreign companies to list in the US is a multiple-class structure, popular among Chinese technology companies. In Q1 2018, 9 Chinese companies listed in the US, of which 6 had a dual-class structure—49.0% of IPO proceeds from all non-US companies.
Another common reason for listing in the US is access to an international investors base. However, there is no guarantee that a US listing will generate interest or returns. For example, share prices for 7 of the top 10 non-US companies listing in Q1 2018 all declined on their first day, and have not recovered.
There is also increasing competition to US exchanges from their foreign counterparts. Hong Kong, China, and Singapore have all taken steps to make their own exchanges more attractive to local companies, especially those seeking dual-class structures.
– Written by Ken Fong, Dealogic Research
Data source: Dealogic, as of April 9, 2018