A Chinese shipbuilding group has cancelled a S$666m (US$481m) initial public offering that would have been the largest in Singapore this year.
New Century Shipbuilding, based near the Chinese port of Zhangjiagang on the Yangtze River, scaled down the listing from an initial target of up to S$1.5bn just days ago.
The decision to abandon the flotation comes amid nervousness in global markets triggered by scepticism about the rescue deal for Greece. Investors are also concerned about the potential impact of recent tightening measures in China to rein in a property market which many analysts fear is close to a bubble.
Singapore’s Straits Times Index fell 1.4 per cent on Tuesday and was down a further 1 per cent on Wednesday. The Dow Jones index in the US fell 2 per cent on Tuesday.
New Century gave no reason for the withdrawal. However, it said in a statement on Tuesday that it “intends to review the situation” and would consider relaunching the listing in the “near future”.
The IPO would have given New Century a market value of S$5.31bn. UBS and Morgan Stanley were the joint bookrunners.
GSW, a German property company, on Wednesday also cancelled its plan to raise €491m from a listing in Frankfurt. Companies which have postponed their IPOs recently include Moscow-based UralChem Holding and Grupo T-Solar Global of Madrid. Others, including Excel Trust in San Diego and Milwaukee-based Douglas Dynamics, have reduced initial sales in the past two weeks, according to Bloomberg.
However, other companies have pressed ahead with capital raising plans, including Jiangsu Rongsheng Heavy Industries, another Chinese shipbuilder, which has appointed investment banks including Morgan Stanley to organise a US$1.5bn IPO in Hong Kong, according to people familiar with the matter.
The shipbuilding industry, which is dominated by yards in South Korea, China and Japan, has been in turmoil since 2008 due to overcapacity and a collapse in orders. As a result, many shipbuilders have had to scale down their ambitions to raise funds in the capital markets.
New Century’s decision to pull its IPO will be a disappointment to the Singapore Exchange, which said last week that it had a “strong pipeline” of Chinese offerings in prospect once the Chinese shipbuilder’s capital raising had taken place.
“Looking at the mandates that have been awarded to the investment banks I am quite heartened to see that it is a very good mix of overseas companies,” Gan Seow Ann, head of markets at the SGX, said in an interview with the Financial Times last week.
The SGX says its total of 303 overseas listings includes 155 from mainland China, more than any other exchange except Hong Kong, and almost double the total of 85 in 2005. There have been 12 Chinese listings so far this year out of a total of 35 IPOs.
Singapore’s institutional investor base is about twice that of Hong Kong, with assets under management of about $1,250bn.
