Thursday, September 14, 2006

23 out of 24 IPOs...

By the way, you ever wonder who those top initial public offerings of 2005 were? (You know, the ones not listing in the United States that otherwise would be, if it weren’t for the Sarbanes-Oxley Act, that the Commission on Capital Markets Regulation has got its undies in a bunch over?) It’s not easy to find, and seldom mentioned, but here are the 24 that topped $1 billion, one of which listed in New York:
  1. China Construction Bank (Chinese state-owned company listing in Hong Kong)
  2. Electricité de France (French state-owned company listing on Euronext)
  3. Gaz de France (French state-owned company listing on Euronext)
  4. China Shenhua Energy Co Ltd (Chinese state-owned company listing in Hong Kong)
  5. Bank of Communications China (Chinese state-owned company listing in Hong Kong)
  6. Tele Atlas N.V. (Dutch company listing on Euronext)
  7. PartyGaming (Gibraltar-based gambling company listing in London)
  8. Goodman Fielder Ltd (Australian company listing in Australia)
  9. AFK Sistema (Russian company listing in London)
  10. Huntsman Corp (U.S. company on the NYSE)
  11. Raiffeisen International Bank (Austrian bank listing in Austria)
  12. Premiere AG (German company listing in Frankfurt)
  13. SUMCO Corp (Japanese company listing in Tokyo)
  14. China COSCO Holdings Co Ltd (Chinese state-owned company listing in Hong Kong)
  15. Spark Infrastructure Group (Australian company listing in Australia)
  16. Telenet Holding NV (Belgian company listing on Euronext)
  17. RHM UK (UK company listing in London)
  18. Kazakhmys (Kazakh company listing in London)
  19. EFG International (Swiss company listing in Switzerland)
  20. Sanef France (French company listing on Euronext)
  21. SP AusNet (Australian company listing in Australia)
  22. Eutelsat (French company listing on Euronext)
  23. EuroCommercial Properties (Dutch/French company listing on Euronext)
  24. TrygVesta (Danish company listing in Denmark)
Take a good look at these. What do you see?

Do you see that the first five largest IPOs were state-owned companies being privatized and listed on pretty much the home exchange? And Number 7, PartyGaming? Kinda hard to list in the U.S. if your CEO is likely to get arrested when he flys to NY to ring the NYSE's bell. And, of course, Number 9 (AFK Sistema) and Number 18 (Kazakhmys). What can be said about listing a Russian or Kazakh company that Borat Sagdiyev probably hasn't already said? (Yeah, London, good luck with those...And good luck with Rosneft, too.)

Sure, back in 1999, when investors were hurling money at companies with names like Dogwalking-dot-com, a lot of those companies might have listed in New York. But can you really imagine any Chinese, Russian or Kazakh company adhering to any decent set of accounting or disclosure standards? Is it really SOX that's standing in the way?


Alex Simpson said...

I agree that 23 out of 24, or 24 out of 25 is misleading -- many of those would have listed on the home exchange or in London. However, I think you'd find that 4 or 5 years ago, many of them would have simultaneously listed American Depositary Receipts on the NYSE. I think that SOX (or the overblown hype) is having some effect, although I think globalization and increased electronic communication have also made it less important where you're listed -- it's not much harder for New York-based traders to trade in London than on the NYSE/Nasdaq.

Alex Simpson said...

Also, your link to my blog post is wrong -- you used the trackback link. Here's the correct one:

(I also updated my post to link to your post).

M.D. Fatwa said...

Sorry about the bad link. Still getting used to this.

You are right about the ADR listings, though I think the SOX aspect is vastly overblown. The most burdensome part of SOX is 404, which, when you get down to it, pales in comparison to the U.S. shareholder private right of action in costs. And we've had that cost for quite some time.

At the same time, you have:

1) An unstable currency situation--why have a listing in the U.S. if your return diminishes as the dollar devalues?

2) Very low interest rates--why list in the US when borrowing is cheap?

3) Growing recognition of other markets as safe and liquid places to invest.

If you look at those 24 top IPOs last year, to my eye at least, the dark-horse winner seems to be Australia. Three listings out of 24, and none are state-owned enterprises going through privatization. Even Euronext only has 5 in that category. And London has only 2 (I'm not counting the Russian or Kazakh companies.)