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DJ Asia Dealmaking to Stay Hot After Quick Start to 2021, Citi Says

· 02/08/2021 01:53
Ben Otto

Dealmaking activity in Asia is set to remain hot in 2021, with a steep rise in public offerings and debt issuances early in the year offering a sign of what's to come, Citi said.

The market for initial public offerings and fundraising in Asia continues to be driven by investor appetite for disruptor companies and the breakneck speed of company formation in the region, the U.S. bank said.

"You're seeing the greatest disruption the world has ever seen in terms of new technologies arriving, things being changed," Jan Metzger, Citi's head of Asia-Pacific banking, capital markets and advisory, said in an interview.

The reallocation of assets into the likely new winners will continue "for the next five [years], for sure," he said.

Dealmaking in the region has been on a tear in 2021, with the top 10 bookrunners' Asia ex-Japan IPOs nearly doubling to more than $18 billion from about $10 billion in the same period a year earlier, according to data from Dealogic.

Mr. Metzger said Citi expects Hong Kong, China and Australia to remain strong markets in the months ahead, with deal activity in India and Southeast Asia likely to rise. "The pipeline is the strongest I have seen in my career in banking," he said.

The bank sees the highest potential in health care, technology and consumer goods, "the stocks doing the disrupting," he added. Of particular interest is cloud-based software companies, with their potential to penetrate a market where piracy and other issues once held the industry back.

In the year's biggest Asia IPO, Tencent-backed Kuaishou Technology raised more $5 billion in Hong Kong after retail investors bid for 1,200 times the number of shares initially on offer.

The value of U.S.-dollar bond deals in Asia ex-Japan likewise is soaring, up nearly 50% to $74.6 billion, not including short-term and money market bonds.

Citi leads all bookrunners in those bond deals in 2021--with a total value of $6.5 billion in the year to date, up from $2.1 billion a year earlier--and sits in second place in Asia ex-Japan IPOs, with its deal value jumping to $1.6 billion so far this year from about $54 million in the same period last year. The bank ran four special-purpose acquisition companies, or SPAC, IPOs in January.

Write to Ben Otto at ben.otto@wsj.com

(END) Dow Jones Newswires

February 08, 2021 01:53 ET (06:53 GMT)

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