Asian Companies Look to U.S. for Listings

By LYNN COWAN More Asian companies are going public in the U.S., where some can attract a higher price than would be possible on their home turf. Five of the 15 initial public offerings that have priced in the U.S. this year have been from Asia, while no other region has had a company tap the American market, according to data from Dealogic. There is only one Asian filing in the backlog of 24 companies that have been actively moving forward on their deals this year, that of Chinese online video game company Shanda Games Ltd. (The data exclude real-estate investment trusts, empty-shell companies and deals raising less than $10 million.) But there is a pipeline of Asian companies preparing IPO paperwork behind the scenes with the U.S. Securities and Exchange Commission, according to bankers and lawyers. "There have been some new confidential filings in the last two months that have started building up the pipeline. It's not growing dramatically, but it is starting to build," says J. West Riggs, head of Asia equity capital markets for Piper Jaffray Cos. Not every Asian company has been a hit with U.S. investors. Chinese chemicals firm Chemspec International Ltd. and Hong Kong's CDC Software Corp. floundered on their first days of trading and closed on Friday below their IPO prices. Chemspec made its debut in June on the New York Stock Exchange and CDC on the Nasdaq Stock Market in August. But Chinese video-game maker Changyou.com, which went public in April on the Nasdaq, and Chinese water treatment firm Duoyuan Global Water Inc., which debuted in June on the NYSE, made double-digit percentage gains on their first days of trading and have risen more since. Singapore semiconductor designer Avago Technologies Ltd. rose 8% on its debut on the Nasdaq last month and closed Friday up 18% from its IPO price. Bankers say China is likely to be the main source of Asian filings this year. "Most equity investors fundamentally believe that China will continue to be a major engine of global growth. The fact is that the Chinese economy continues to do quite well despite global headwinds," says Kevin Willsey, head of equity capital markets for the Americas at J.P. Morgan Chase & Co. Among the industries expected to deliver more IPOs are technology, education, and specialized manufacturers with good growth opportunities, observers say. Longer term, health-care deals could also emerge, depending on economic and government trends, Mr. Riggs says. Not every Asian company is interested in a U.S. debut. China State Construction Engineering Corp. opted for Shanghai, and China Zhongwang Holdings Ltd. listed in Hong Kong. They are among the biggest IPOs of Chinese companies this year. Making the decision to choose a listing in the U.S. instead of Asia depends on the company's view of U.S. regulation, and often, what type of industry it is in, according to Christine Chang, a joint managing partner at law firm Maples & Calder's Hong Kong office. While the New York Stock Exchange and Nasdaq have a reputation for drawing sophisticated technology investors, U.S. regulations are seen as more onerous than in Asian markets, she says. Traditional businesses tend to hew closer to home, while newer, growth-oriented companies often gravitate to the states. "If it's a health-care, clean-tech, or tech-based company, we have seen that it may be better off listing in the U.S., because it could get a better valuation" for the stock, says Ms. Chang. "But if it's in the securities businesses, banking, or financial services, we have seen that those stocks generally go to Hong Kong." IPOs aren't the only place where Chinese firms are raising money. Seven already listed companies have sold additional shares to the public through follow-on offerings so far this year, compared with five at this point last year, according to Dealogic. Write to Lynn Cowan at lynn.cowan@dowjones.com