China to Capitalize on Nasdaq Jump With Tech IPOs, BNY Says
Chinese and Israeli technology firms, the biggest source of foreign listings on the Nasdaq Stock Market, will boost share sales this year to capitalize on the best gains since 1999, Bank of New York Mellon Corp. said.
As many as eight Chinese technology companies and six Israeli tech and biotechnology developers are planning initial public offerings by listing depositary receipts on the Nasdaq and the New York Stock Exchange in the second half of 2012, said Anthony Moro, the head of emerging-market depositary receipts for BNY Mellon.
The Nasdaq Composite Index (CCMP) has gained 13.5 percent in 2012, the best start to a year for the benchmark gauge in more than a decade, as investors bought technology stocks ahead of the IPO of Facebook Inc. (FB), the world’s dominant social networking site. Rising demand for smartphones and tablets is also boosting companies that make the chips and components for these products, with global Internet traffic to climb fourfold by the end of 2015, Cisco Systems Inc. says.
“Four months ago, our phone wasn’t ringing but now, as the market has risen, we’re pretty busy,” Moro said in a May 3 interview. “It’s a tech and biotech story right now as U.S. investors are looking for growth companies and technology companies are about the only companies growing right now.”
China-based companies accounted for 11 U.S. initial or secondary depositary receipt offerings to raise capital in 2011 and 33 in 2010, according to BNY Mellon.
BioLineRx Ltd. (BLRX), a developer of therapeutic pharmaceutical drugs, was the only Israeli company to raise capital by issuing depositary receipts on U.S. markets in 2011, according to BNY Mellon. SodaStream International Ltd. (SODA), an Airport City, Israel- based maker of homemade soda machines, held an IPO of common shares in New York in 2010.
China has more companies traded on the Nasdaq than any country outside of the U.S., while Israel ranks second, according to Wayne Lee, a spokesman for the New York-based bourse. The Nasdaq has been fending off rising competition from the NYSE, which accounted for 57 percent of proceeds raised in technology company equity offerings in 2011.
IPOs have outperformed the Standard & Poor’s 500 Index (SPX) this year, spurring fund managers to seek “growth” companies, which usually don’t pay a dividend and initially emphasize increasing revenue over making a profit, BNY Mellon’s Moro said.
Companies that have gone public in the U.S. in 2012 have gained an average of 14 percent year-to-date, compared with the S&P 500’s 8.9 percent advance, data compiled by Bloomberg show.
Facebook is valuing itself at as much as $96 billion in its IPO, according to a May 3 regulatory filing. The Menlo Park, California-based company was to meet investors this week and is scheduled to price the offering on May 17, data compiled by Bloomberg show.
Renren Inc. (RENN), a Chinese social networking website that debuted in New York in May last year, has soared 80 percent in 2012, while Tudou Holdings Inc. (TUDO), owner of China’s most-popular online video site, has surged 224 percent.
Israeli biotechnology companies specializing in drug and drug-delivery systems are in the process of gaining approval to be listed in New York, Moro said. The six Israeli companies, which aim to sell shares worth $10 million to $30 million, are similar in size to BioLineRx, he said.
Jerusalem-based BioLineRx has a market capitalization of $49 million, data compiled by Bloomberg show.
Caesar Stone Sdot Yam Ltd. (CSTE), a maker of stone products, was the first Israeli company to hold an initial public offering in New York this year. Caesar Stone has gained 19 percent since selling 6.7 million shares for $11 a share in March. SodaStream has advanced 48 percent since going public.
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