Photographer: Krisztian Bocsi/Bloomberg

IPOs to Surge in 2018, Led by Asia, Deutsche Bank's Hantho Says

  • Asia may see the largest sales, driven by Chinese companies
  • Cross-border merger activity is also expected to see uptick

Proceeds from initial public offerings globally will increase dramatically in 2018, with the largest deals coming from Asia as more Chinese companies sell shares, according to a Deutsche Bank AG executive.

“The dialogue on going public globally in 2018 is on steroids right now,” Mark Hantho, global head of capital markets at Deutsche Bank, said on the sidelines of the World Economic Forum in Davos, Switzerland.

Companies raised about $222 billion from IPOs in 2017, with Asia accounting for the largest share at $95 billion, followed by Europe and the U.S. respectively.

Volumes this year would be given a jolt if Saudi Arabia followed through with its proposed IPO for oil giant Aramco in the second half. The kingdom’s officials have said they hope to raise a record $100 billion, valuing the company at more than $2 trillion and dwarfing the $25 billion raised by Chinese Internet retailer Alibaba Group Holding Ltd. in 2014. But the Saudi oil minister cast doubts on the expected timing, saying at Davos that the share sale would occur “when the time is right.”

In the U.S., health-care and technology IPOs are likely to drive volumes, Hantho said. In Europe, companies including Knorr-Bremse AG and Siemens Healthineers are lining up multi-billion dollar deals for the year.

Another potential behemoth is Chinese smartphone maker Xiaomi Corp., which could target a $100 billion valuation. Deutsche Bank is among advisers mandated on the Xiaomi IPO, Bloomberg News reported this month.

Hantho said a key problem in the region is a lack of good bankers.

“There is a dearth of high quality talent, especially in Asia where the more experienced bankers have moved out of the region or industry,” the banker said. “The fight to hire and retain talent is intense."

The German lender ranked seventh globally in advising on IPOs and corporate bonds in 2017, according to data compiled by Bloomberg.

"We are seeing strong levels of equity and debt financing for mergers and acquisitions," Hantho said. Cross-border deals, especially Europe into the U.S., are expected to pick up this year, he said. American companies buying their European counterparts could be affected by a weaker dollar.

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