Motivations for undertaking a cross border listing can be both financial and non financial. In some instances, regulatory restrictions in a domestic market necessitates listing overseas. In other cases, issuers seek to obtain enhanced benefits, such as access to deeper capital pools. Regardless of the driver, the decision to undertake a cross border IPO needs to be considered as part of a broader capital markets business strategy. It is important to factor future trends as a way to capitalize on opportunities for growth. Below are three trends that are likely to shape future patterns of cross-border IPO activity:
Trend 1: IPO activity continues to evolve
The previous decade witnessed the rise of Asian companies as originators of cross border IPOs. During the same period listing venues outside of traditional global capital centers grew in attractiveness. The demographic of traditional IPO candidates is continuously evolving.
Trend 2: Competition among exchanges will intensify
Although established stock exchanges such as London and New York continue to offer issuers access to global capital pools, exchanges in emerging economies are developing their own offerings too, though not necessarily at a uniform pace. Some exchanges are revisiting their listing rules and compliance procedures in an effort to attract more companies. The globalization of capital markets is creating greater competition among exchanges as they strive to attract global issuers.
Trend 3: Regulation will continue to influence cross border activity
Regulatory changes around the world—such as harmonization of accounting standards, tightening of financial reporting obligations in the US, implementation of pan-European directives, and listing rules revisions by several Asian stock exchanges—have affected the pattern of cross-border activity in the past, and may continue to do so in the future.
Baker & McKenzie’s Capital Markets Practice Group partnered with PricewaterhouseCoopers to produce Equity Sans Frontières, a report on cross-border listings which analyzed regional and global data to highlight trends and forecasts the future of global IPOs. For a more in-depth read on cross-border IPOs trends, click here for a copy of the report.