Asia's once-hot initial public offering market is likely to open up again soon, with secondary volumes in the equity sector showing signs of picking up, said the Asia head of investment banking at Europe's biggest bank HSBC Holdings Plc
Interest from international companies looking to list in Hong Kong has also increased and is likely to be an area of interest for HSBC <0005.HK>, Robin Phillips, head of global banking and markets in Asia, told Reuters in an interview on Wednesday.
It's just a matter of time before the IPO markets open up again, and we need to be prepared for when that happens, he said.
Major IPO deals that HSBC's investment banking arm is working on include being joint bookrunner for high-end jeweller Graff Diamonds, which formally applied for a Hong Kong listing last week, according to people familiar with the matter.
The uptick in the equities market comes after a weak performance in 2011, with stock sales in Asia excluding Japan plunging 42 percent from a year earlier to $195 billion (123 billion pound).
HSBC is ranked second by fees in Asia excluding Japan this year, helped by its strength in underwriting bonds and in particular by heavy opportunistic borrowing in debt markets by Hong Kong companies. It has made an estimated $29 million in investment banking fees so far this year, beating rivals such as Goldman Sachs Group Inc
The rising cost of loans in Asia has pushed many companies into issuing debt, including first-time bond issuers such as Hong Kong property developer Nan Fung International Holdings.
Hong Kong companies are now looking to broaden their funding base, Phillips said. This is a very positive development that is brought about partly by an increased cost of funding, which in turn is caused by tighter liquidity and withdrawals by certain European banks.
The region is also likely to see a rise in the number of bonds issued by companies to finance specific projects, especially in transport and infrastructure spending, said Phillips.
Pressure on infrastructure funding is likely to worsen as developing Asian economies increase infrastructure spending, with the Philippines set to lift spending by almost a quarter this year to 182 billion pesos ($4.3 billion).
We are likely to see more project bonds, but the challenge is getting investors comfortable with construction risk, Phillips said. As such, in Asia, it's likely we'll see more investor interest in the post-construction phase.
(Editing by Chris Lewis)