The IPOX® Update 10/16/23

IPOX® ETF (FPX) in Focus Amidst Current IPO Climate

The IPOX® 100 U.S. ETF - (First Trust US Equity Opportunities ETF (FPX) - has risen by +4% this year, while showing a -7.2% decline over the past three years. The long-term performance of our index stands out, especially when compared to the Renaissance IPO ETF, which fell by -18.6% during the same 3-year period. The IPO landscape is currently challenged by geopolitical concerns and previous market dynamics. In recent times, notable IPOs like restaurant-chain Cava and marketing/data firm Klaviyo are the few that have managed to remain above their offering prices. Conversely, the NYSE debut of footwear manufacturer Birkenstock saw a nearly 21% fall from its initial pricing. A drastic reduction in IPO activity has also been observed, with only 30 companies making their debut in Q3 2023, as opposed to 94 companies in Q3 2021. Factors like market speculations between 2020-2021 and the Federal Reserve's rate hikes have also influenced a dampened enthusiasm towards IPOs. Moreover, the Israel-Hamas conflict has introduced an element of disruption in global markets, adding another layer of vulnerability to the IPO sphere. (Source)

J&T Global Pursues $500M Hong Kong IPO

J&T Global, the express-delivery service backed by Tencent, is targeting a $500 million IPO in Hong Kong. If successful, it will mark the city's most substantial IPO since ZJLD Group's $670 million debut in April. Hong Kong's once-vibrant IPO activity is seeing a decline, attributed to the decrease in Chinese companies listing and foreign investors pulling back. Originating in Indonesia, J&T Global has expanded its reach, serving renowned e-commerce platforms like Alibaba's Taobao, Shein, and ByteDance's TikTok. Interestingly, over 50% of J&T's $4 billion six-month revenue is generated from China. Alongside Tencent, J&T's investment portfolio is decorated with names such as Hillhouse, Sequoia, and Temasek, all of whom are set to buy more shares in the upcoming IPO. Meanwhile, Alibaba's logistics arm, Cainiao, is also setting its sights on a Hong Kong IPO, targeting $1 billion (Source).

KKR to list Kokusai Electric, Seeking $723M in largest Japanese IPO since 2018

Kokusai Electric, the chip-equipment maker previously affiliated with Hitachi Kokusai Electric Inc., is on the brink of its IPO. Investment firm KKR is spearheading the offering, aiming to raise $723 million, marking Japan's most significant IPO since 2018. With shares priced at ¥1,840 each, at the top of the formerly reduced range, the trading of Kokusai Electric's shares is set to commence on October 25. This IPO marks a notable revitalization for Japan's market, with SoftBank Corp.'s ¥2.4 trillion offering in 2018 being the previous record-holder. Despite being pivotal for AI and supercomputing industries, Kokusai Electric navigates challenges, notably geopolitical tech disputes and a recent decline in revenue. The company, which serves semiconductor titans, lists Samsung Electronics and Taiwan Semiconductor Manufacturing Co. (TSMC) as top clients (Source).

South Korea Witnesses IPO Wave with Seven Companies Entering Bookbuilding

In an unprecedented IPO wave, South Korea is set to welcome seven companies initiating their bookbuilding sessions this week. At the forefront, guarantee insurer Seoul Guarantee Insurance Co. (SGI) is aiming for a 3 trillion won ($2.21 billion) IPO, projected as 2023's largest, double the size as recently listed Doosan Robotics. SGI, as Korea's only exclusive guarantee insurer, plans its listing on November 3, with Mirae Asset and Samsung Securities overseeing the process. Smaller firms planning listings include radio frequency (RF) filter foundry SAWNICS Inc., healthcare platform U2Bio Co., greenhouse gas mitigator Echoeye, business solutions provider BI Matrix Co., equipment parts producer Megatouch, satellite data integrator Contec, cancer therapy innovator Curocell, semiconductor firms, Wot Co. and Qualitas Semiconductor Co. (Source).

Anime Product Creator Kayou Plans Hong Kong IPO

Shanghai and Zhejiang-based anime product creator, Kayou, is setting its sights on a Hong Kong IPO for the upcoming year. Collaborating with China International Capital Corp. and Morgan Stanley for the share sale preparations, Kayou intends to raise several hundred million dollars. The final figure will, however, depend on the prevailing market conditions. Kayou, renowned for producing collectible cards of popular franchises like Ultraman and My Little Pony, boasts of more than 50 intellectual property partnerships. The company's growing reputation is also bolstered by its association with Olympic gold medalist Tian Liang, who serves as their brand ambassador. Highlighting the growing demand for animation-themed collectibles, the rising middle class in China is playing a pivotal role. Another toy maker, Pop Mart, had previously secured HK$6 billion during its 2020 Hong Kong IPO, and it currently enjoys a valuation of $4.2 billion. (Source)