The outlook for US IPOs from Chinese companies has soured in the past few months amid mutual recriminations over the sharing of sensitive data and a crackdown on large private companies by Beijing.
As the federal government forces Chinese companies to de-list from American exchanges, the NYSE and Nasdaq are eyeing Indian and Southeast Asian firms to fill the gap.
“We think the entire region is ripe for IPO activity,” said Bob McCooey, Nasdaq’s Asia-Pacific chair
To illustrate just how big of a shift would need to occur for AsiaPac business to even come close to offsetting the losses from China, consider this: Over the past year, there have been more offerings involving Chinese companies than from the rest of Asia combined.
Of course, the recent listing of Singapore-based Grab is one notable recent highlight. The company went public via the SPAC route in a deal that was announced back in April.
One major reason for the discrepancy is that India has rules that make it extremely difficult for local companies to list in the US. To date, renewables operator Azure Power is the only company based in India trading on US exchanges.
The FT also spoke with Alex Ibrahim, NYSE’s head of international capital markets, who said exchange officials had been “spending a lot of time focused on south-east Asia, more so than in previous years, and I think this will continue.”
Bottom line: both exchanges are hoping to find ways to recruit more offerings from India (perhaps they’ll find a new loophole to hoodwink gullible US investors, like they did for China with the VIE), and also Indonesia. Those countries are obvious targets due to the sheer size of their populations (and economies). But already, Delhi-based software company Coforge is expected to list in the US next year (it already trades in India) and Bangalore-based education firm Byju is expected to list in a SPAC deal.
Still, the total addressable market for unicorns is relatively small outside China.
But smaller markets like Vietnam and Malaysia are expected to contribute to the uptick as well. There are only 80 private companies worth more than $1 billion in the Asia-Pacific region outside China, according to CB Insights.
Although Hong Kong’s exchange business is likely to get a bit of a boost from Chinese firms, the CCP’s “closure” of the Hong Kong money gateway to the west might create enough of a chill in other areas to incentivize HKEX to look for more deals in neighboring countries as well. Hong Kong has already one major victory: Indonesian delivery group J&T just listed there. The company’s currently worth $20 billion.
