International IPO\'s Cross- Listing International

International IPO's

Cross- Listing International IPO's

The three-decade long trend of expanding financial globalization has seen marked growth in financial centers, commercial and investment banking, central banking interdependence, and developed capital and equity markets. Innovations in these arenas as well as other platforms have resulted in deeper, more liquid, transparent, efficient, and integrated capital markets. Against this backdrop corporations seek to tap into funding pools which provide the best mix of weighted average cost of capital, transaction cost, regulatory certainty, and value added.

A strategic piece of this funding puzzle has taken the form of cross-listing equity positions across the global footprint: London, New York, Tokyo, Hong Kong, Singapore and others. "We have seen broad interest in cross-border listings, as our clients seek to expand into other markets, tap new investors, and take advantage of higher valuations and liquidity, said Amar Budarapu, Chair of Baker & Mckenzie Global Securities practice group" (Baker & McKenzie.com. June 28, 2011. PP. 1).

Background

Cross-listing on multiple stock exchanges is a relatively recent phenomenon; "in the 1980s and 1990s, hundreds of companies from around the world duly cross-listed their shares" (Dobbs, R. & Goedhart, M. November 2008. PP. 1). The purpose of which was to "buy access to more investors, greater liquidity, a higher share price, and a lower cost of capital" (Dobbs, R. & Goedhart, M. November 2008. PP. 1). Traditionally these cross-listing equity positions centered on the financial capital mainstays: London, U.S. And Tokyo. Yet, as capital markets became increasingly more accessible and liquid cross listing opportunities proliferated to more diverse developed economies: Australia, Germany, and France as well as developing economic centers: Singapore, Hong-Kong, and Malaysia.

Who Cross-Lists?

Access to capital is a fundamental necessity for all companies, and as such cross-listing does not categorize itself to organizations based on easily discernible factors: size of offering, market capitalization, country of origin, and other elements. A logical starting point for analysis however, is the unremarkable yet important espy that cross-listing entities are existing firms or new ventures seeking capital. New companies attracting capital often view cross-listing as a crucial way to increase global visibility and provide financial stability. "IPOs that go public abroad are an important source of new capital for firms. From 1995 to 2007, 6% of all IPOs go public outside their country of origin and this activity accounts for a fifth of all IPO proceeds. (Caglio, C. Hanley, K. & Marietta-Westberg, J. March 2011. PP. 3).