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Thailand, Philippine firms lead revival in Southeast Asia IPOs

SINGAPORE/BANGKOK: Thailand and Philippine companies are leading a regional pick-up in initial public offerings (IPOs), spurred by growing investor interest in firms focussed on Southeast Asian consumers.

Asset World Corp, the hospitality and property firm listed by Thai billionaire Charoen Sirivadhanabhakdi, and Philippine home furnishing retailer AllHome Corp raised $1.6 billion and $285 million, respectively.

In the Philippines, AllHome became the third company to tap the local market in 2019, compared with just one IPO in 2018, and its shares debuted 1.04% higher at 11.62 pesos ($0.2249) on Thursday.

The home furnishing retailer, owned by the Philippines’ richest man, Manuel Villar, raised 12.937 billion pesos ($250.4 million). An option to sell 168.75 million over-allotment shares could beef up the IPO to $285 million.

“The home improvement industry in the Philippines is underpenetrated so we thought of introducing a retail concept with global standards which eventually complements our expertise as the largest homebuilder in the country,“ Villar, AllHome’s chairman, said in a statement.

AllHome operates 27 stores and plans to at least double its selling space by end-2020.

Asset World Corporation was the largest IPO by a Thai firm, while AllHome was the Philippines’ biggest in three years. The Thai company is slated to start trading at 0300 GMT on Thursday.

Singapore still leads on overall first time share sales in Southeast Asia in 2019, but it has achieved this mainly through offerings of real estate and business trusts.

In Thailand, 11 companies raised a total of $1.9 billion from January to Oct. 4, compared with five firms raising less than $100 million in the same period a year ago, Refinitiv data showed. The data excludes real estate and business trusts.

“We expect Thailand to be one of the stronger IPO markets in 2020. Some more large IPOs have started preparations this year and are set to list next year,“ said Ho Cheun Hon, head of Southeast Asia equity capital markets at Credit Suisse.

He said international fund managers continued to be attracted by the growth in consumption across Southeast Asia.

Half of Asset World Corporation’s shares were subscribed by 13 cornerstone investors, including Singapore sovereign wealth fund GIC, which put in about $300 million.

Bankers said the 2020 deal pipeline for Thailand included fund raising by a unit of the country’s biggest retailer Central Group, a retail arm of oil company PTT Pcl and others.

PTT’s retail IPO will give investors exposure to 2,000 coffee shops, gas stations and auto repair shops.

Bangkok Commercial Asset Manager, which handles distressed debt, has also filed to list, offering a niche business as there are only two publicly traded debt collectors in Thailand.

“Thai institutions and retail investors are more focused at home … and there is a lot of capital looking for good investments,“ SCB Executive Vice President Veena Lertnimitr said.

AllHome hired UBS as the sole global co-ordinator, and joint bookrunner with CLSA and Credit Suisse. China Bank Capital and PNB Capital are the local underwriters. -Reuters

PropertyGuru files for IPO in Australia

SINGAPORE: Southeast Asian online realtor PropertyGuru Ltd filed a prospectus in Australia seeking an initial public offering (IPO) that could raise as much as A$380.2 million (RM1.1 billion).

PropertyGuru, whose backers include buyout firms TPG Capital and KKR, has set an indicative price range of A$3.70 to A$4.50 each, according to its prospectus filed with the Australian Securities and Investment Commission today.

Last month, Reuters had reported the Singapore-based company’s plans to list in Australia.

PropertyGuru operates in Singapore, Vietnam, Thailand, Malaysia, and Indonesia.

“We intend to use part of the proceeds from the offering to pursue our growth strategy,“ PropertyGuru’s CEO Hari Krishnan said in a statement, adding that the company was looking at providing property seekers in the company’s core markets with access to mortgage financing through an online mortgage marketplace.

“PropertyGuru’s proforma revenue has grown at a 26% compound annual growth rate over the last three years. 2018 also marked the first year PropertyGuru became both EBITDA and free cash-flow positive,“ Krishnan said.

PropertyGuru is set to have an indicative market value of up to A$1.36 billion. The retail offer will open on Oct 16 and close on Oct 22 and trading is set to begin on Oct 25.

Credit Suisse, KKR Capital Markets, TPG Capital BD and UBS are the joint lead managers to the IPO. – Reuters

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Global stocks fall on weak US manufacturing data

NEW YORK: Stock markets on both sides of the Atlantic took a steep downward turn on Tuesday after a US survey pointed to the weakest manufacturing sector in a decade.

Combined with a tepid inflation reading from the eurozone, and confirmation that British GDP contracted in the second quarter, the figures rekindled fears over worldwide growth.

An index of US manufacturing activity fell to the lowest level since June 2009, according to the Institute for Supply Management, which pointed to trade conflicts as the biggest headwind.

“Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019,” Timothy Fiore, chair of ISM’s manufacturing survey, said in a statement. “Overall, sentiment this month remains cautious regarding near-term growth.”

The report came as the World Trade Organization on Tuesday cut its 2019 trade growth forecast to 1.2 percent, warning of an economic hit from tensions over international commerce.

“Trade conflicts heighten uncertainty, which is leading some businesses to delay the productivity-enhancing investments that are essential to raising living standards,” Azevedo said.

And he cautioned that job creation could also be threatened “as firms employ fewer workers to produce goods and services for export.”

Eurozone stocks, which had spent most of the session calmly tweaking portfolios at the start of the final quarter, suffered an abrupt fall to end the day.

Wall Street, which had opened higher, fell quickly into the red and stayed down the rest of the day. Major indices ended down more than one percent.

The ISM report was a “game changer,” said LBBW’s Karl Haeling.

“There’s a growing recognition that the spread of negative economic impulses around the world is starting to land on US shores in a meaningful way.”

Analysts have pointed to upcoming trade talks between Beijing and Washington as critical to the market’s fortunes in the coming period.

Other key potential catalysts include the third-quarter corporate earnings period and upcoming Federal Reserve meetings that could lead to lower interest rates.

Strike hits GM

Among individual companies, General Motors dropped 3.7 percent as a United Auto Workers strike further pinched operations.

The company announced it will furlough 6,000 workers in Mexico due to the strike, while JPMorgan Chase estimated the strike has cost the company around $1 billion so far. Workers in Canada also were laid off temporarily.

Shares of online brokerage firms plunged after Charles Schwab announced plans to eliminate commissions for many trades. Schwab fell nearly 10 percent, while Etrade sank 16.4 percent and TD Ameritrade nosedived 25.8 percent.

US-listed shares of Credit Suisse dropped 2.7 percent following the resignation of chief operating officer Pierre-Olivier Bouee after an internal investigation into the bank’s decision to spy on a star banker who left for rival UBS.

An internal probe exonerated chief executive Tidjane Thiam in the scandal, which has shaken the bank in recent weeks. – AFP

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Global Q3 M&A sinks to 3-year low amid US-China trade war fears

LONDON/NEW YORK: Global mergers and acquisitions (M&A) plunged 16% year-on-year to $729 billion in the third quarter, according to Refinitiv data, the lowest quarterly volume since 2016, as growing economic uncertainty curbed the risk appetite of companies considering deals.

Concerns that the trade war between the United States and China has plunged global economic growth to its lowest levels in a decade weighed on dealmaking, even as debt financing for acquisitions remained cheap and equity markets stayed robust.

“M&A volumes have dissipated because there are concerns that risks may be rising in several spots, in markets and elsewhere,” said Michael Carr, global co-head of M&A at Goldman Sachs Group Inc.

The United States, where consumer spending barely rose in the summer and business investment remained subdued amid the trade tensions, was particularly hit. U.S. M&A sank 40% year-on-year to $246 billion in the third quarter, the lowest such quarterly level since 2014.

Asia, which has been hit by concerns over the future of Hong Kong as a financial hub following a wave of pro-democracy protests, fared only slightly better. M&A activity in the region dropped 20% year-to-year to $160 billion, the lowest level since 2017.

Dealmakers said a mismatch between buyer and seller valuation expectations often proved hard to bridge, with some deals failing to reach the finish line.

“Companies looking at deals have become more risk-averse, and this is likely to bring M&A volumes down for the year. But we expect M&A activity to be strong going into next year,” said Robin Rankin, global co-head of mergers and acquisitions at Credit Suisse Group AG.

The only regional bright spot in the third quarter was Europe, where M&A activity reached $249 billion, up more than 45% over the same period last year.

“In Europe we have seen a real mix of different kind of deals which were spread across various sectors and geographies,” said Eamon Brabazon, co-head of EMEA M&A at Bank of America Corp.

“This is a sign of a healthy market because we’re not relying only on a particular strand. There’s no obvious reason to believe the M&A market will turn south in the foreseeable future,” he added.

Britain, where uncertainty over Brexit has turned companies into cheaper acquisition targets, remained Europe’s biggest M&A market with a 6.4% share of global M&A and $177 billion worth of deals so far this year.

Sterling’s near record lows against other major currencies encouraged overseas buyers to snap up “UK Plc”, with Hong Kong’s richest man Li Ka-shing swooping on pubs operator Greene King and buyout fund Blackstone leading a buyout for Madame Tussauds and Legoland owner Merlin.

A big attempted transaction in the third quarter was Hong Kong Exchanges and Clearing’s (HKEX) proposed $39 billion takeover approach to the London Stock Exchange Plc (LSE) . The latter has so far rejected HKEX’s overtures.

The biggest deal attempted in the quarter was Marlboro maker Philip Morris International Inc’s bid to reunite with Altria Group Inc, in what would have been the biggest corporate merger since 2016, creating a tobacco giant with a market value of more $200 billion. The deal was abandoned last week amid concerns about regulators cracking down on e-cigarettes and vaping products.

Among the big deals in the quarter that made it to the finish line and were sealed with merger agreements were the $24.6 billion merger of U.S. drug giant Pfizer Inc’s off-patent branded drugs business with Mylan NV, and U.S. media companies CBS Corp and Viacom Inc’s merger in a $20 billion all-stock deal.

As companies deliberate whether they should ink deals by the end of the year, dealmakers expect the M&A pipeline ahead to stay healthy, possibly matching last year’s annual volumes of $3.91 trillion in announced transactions.

“Management teams are watching very closely because shareholders expect companies to take advantage of these conditions to grow their business,” Goldman’s Carr said. – Reuters

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