A service of

Follow-on boost: Morgan Stanley climbs to top of 1Q ranking amid depressed IPO market

A rebound in Asia Pacific's follow-on activity in the three months ended 31 March versus the previous quarter catapulted Morgan Stanley to the top of the region’s equity capital markets league table, overtaking UBS, according to Dealogic data.

Morgan Stanley, managed USD 3.94bn worth of ECM deals in apportioned value in the January-March period, nearly trebling the USD 1.4bn recorded in the previous quarter when it ranked fourth. 

Of the first quarter total, USD 3.67bn was generated from follow-on transactions, USD 164m from initial public offerings and USD 103.5m from equity-linked bonds offers.

Among the three major asset classes, both follow-ons and equity-linked bonds almost doubled sequentially in the first quarter in terms of dollar value in APAC, leaving the IPO market as the only segment that remained in doldrums, Dealogic data shows.

China’s abrupt relaxation of its years-long COVID restrictions in late 2022 helped indices, especially Chinese shares, to recoup some of the lost ground, allowing some secondary market deals to get done. But valuations remained too low for first-time share issuers to pull the trigger.

Out of the region’s top 10 follow-ons, Morgan Stanley was among the joint runners in Japan Post Holdings’ JPY 1.2trn (USD 9bn) secondary offering of Japan Post Bank shares and a USD 355m block in India’s InterGlobe Aviation Ltd [NSE: INDIGO, BOM:539448], but solely managed a USD 509m block in Wuxi Biologics Cayman Inc. [HKG: 2269].

Regional runner-up Goldman Sachs climbed up seven spots, arranging USD 3.86bn worth of ECM transactions – a big leap forward from the fourth quarter of 2022’s USD 606m - underscored by USD 3.22bn worth of follow-ons.

Goldman was involved in five of the top 10 placements of the quarter.

Other than Japan Post Bank and InterGlobe Aviation, it was also engaged in a USD 510m iQIYI [NASDAQ:IQ] follow-on, a USD 409m Bilibili [NSADAQ:BILI; HKG:9626] placement and a USD 406m block in Pilbara Minerals [ASX:PLS], Dealogic shows.

JPMorgan came in No.3 in the first quarter, managing USD 3.2bn worth of deals in total, with nearly USD 3.1bn generated from follow-on deals. The bank managed USD 1.8bn worth of deals in the final quarter of 2022.

Goldman Sachs also topped the league table for Asia’s equity-linked bond market in the first quarter, arranging three deals worth USD 551m in apportioned value, according to Dealogic data.

The three deals were Wynn Macau’s [HKG:1128] USD 600m convertible bond, iQIYI’s USD 600m CB and The
Straits Trading Co’s [SGX:STRTR] SGD 370m (USD 282m) of bonds due 2028 exchangeable into Hong Kong-based logistics real estate developer ESR Group [HKG:1821].

Bank of America came in second in the equity-linked bond market, managing three deals worth USD 373m. On top of the Wynn Macau and iQIYI papers, the bank also led the CIP Funding Pty Ltd's AUD 300m (USD 207m) exchangeable bond into Centuria Industrial REIT [AXS:CIP].

Nomura ranked No.3, thanks to a JPY 35bn (USD 266m) Euroyen CB by Park24’s [TYO:4666].

IPO crumbs

The IPO market, excluding China’s A-shares, raised a mere USD 5.37bn in the just ended quarter, about half of the USD 11.34bn registered in the previous quarter. The league table was rather fragmented.

Among the IPO arrangers, Credit Suisse came in first, managing three deals worth USD 307m, followed by CITIC Securities, which ran six deals worth USD 276.6m, while Mandiri Sekuritas from Indonesia managed two deals for USD 243m, according to Dealogic.

As reported by this news service earlier, Indonesia was the busiest IPO market in Asia, excluding A-shares, in the first quarter, pricing 22 listings for USD 1.44bn.

The outlook for 2Q remains murky. 

While IPO filings have piled up recently, especially in Hong Kong, most deals may not happen until the second half of the year. And that is provided global inflation and geopolitical situations have become more favorable.