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China IPOs boost Asia Pacific deal trends

Elaine Tan
Elaine Tan
Senior Analyst, Deals Intelligence

What were the Asia Pacific deal trends in Q1 2020? Charts from Deals Intelligence reveal a significant quarter for China IPOs and for debt capital markets, but weakness for M&A activity as the COVID-19 pandemic took hold.

  1. The Asia Pacific deal trends in Q1 2020 featured the best start to a year for IPO proceeds in nearly a decade, driven by China IPOs.
  2. China also dominated debt capital markets, leading to the second biggest quarter on record for primary bond issuance.
  3. M&A activity at a five-year low highlights the impact of COVID-19 on Asia Pacific deal trends in Q1 2020.

Download the latest Deals Intelligence investment banking quarterly reports

IPOs in Asia-Pacific (excluding Japan) saw their best start to a year in nearly a decade, with proceeds up 93 percent year-on-year to US$16 billion, almost two-thirds of which came from China.

There were some mega deals, such as the $4.4 billion flotation of Beijing-Shanghai High Speed Railway in January, the biggest IPO globally for the first quarter of 2020. And there was also an increase of 16 percent in the number of IPOs.

Overall, the region’s equity capital markets activity fell by 10 percent to $46 billion, while ticking up two percent by number. Low points included convertible bond proceeds, which tumbled 60 percent to $9.4 billion, and fell 25 percent by number of issuances.

China dominates bond issuance

In the debt capital markets, while primary bond issuance fell two percent year-on-year to $622 billion, it was still the second biggest quarter on record.

China dominated bond issuance, with a 74 percent market share. South Korea was a distant second, with seven percent of the market.

Activity in investment grade bonds was even more frenetic, hitting an all-time high of $358 billion, surpassing the record set in Q1 2019 by 1.6 percent.

Postal Savings Bank’s $11.4 billion perpetual bond issuance (an increasingly popular product), remains Asia’s largest bond offering so far this year. Bond offerings from Government & Agencies accounted for 37 percent of the market, raising $229 billion.

M&A market weakness

By contrast, it was a slow start to the M&A market in Asia Pacific, with the aggregate value of announced deals falling 2.5 percent on the year to $189 billion, a five-year low.

Watch video: M&A Under Lockdown | The Corona Correction

The market was held up by the financials sector, which almost doubled its market share to 20 percent.

Huishang Bank’s $15.3 billion planned acquisition of four branches of struggling rival BaoshangBank will be the largest Chinese bank acquisition on record and the second biggest-ever bank acquisition involving Asia Pacific.

Investment banking fees

In terms of fees, equity capital market deal makers saw a very solid start to the year, with $1.1 billion earned, up 23 percent on a year ago.

DCM deal makers saw their fee income slide five percent but, with this $2.8 billion contribution to the coffers remains historically strong, and represents more than half of all investment banking fees in the quarter.

M&A was not so strong, with fees hitting an eight-year low of $473 billion. CITIC took the top slot overall, capturing a five percent market share in Asia-Pacific.

Download the latest Deals Intelligence investment banking quarterly reports

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