China Everbright Bank Co Ltd on Friday delayed a planned Hong Kong share offering of up to $6 billion, sources said, the latest casualty from a rout on global equity markets.
The mid-sized lender's move follows similar steps taken by companies in the United States as fears grow that Europe's debt crisis is spinning out of control and the U.S. economy could face another recession.
"It is hard to see a big roaring bull market after what happened last night. There is some very severe technical damage that has been inflicted on markets," said Mark Matthews, Singapore-based head of research, Asia, at wealth manager Bank Julius Baer.
U.S. employee benefits management firm WageWorks Inc delayed its initial public offering after the heavy stock market losses on Thursday, according to a person familiar with the offering.
The IPO was scheduled for Friday, but it is now expected early next week, the person added.
Auto and mortgage lender Ally Financial, which is planning a $6 billion IPO and was hoping to launch the offering in June, then considered the late summer, is now not expected to come to the market before September, sources said.
And a secondary offering of General Motors Co shares by the U.S. Treasury also looks likely to be later than originally anticipated.
European and U.S. markets plunged on Thursday as fears mounted about the health of the global economy. Major U.S. indexes fell more than 4 percent, with the technology-heavy Nasdaq down 5 percent, erasing gains for the year as the broad-based S&P 500 entered a correction of more than 10 percent from a peak in May.
The selloff continued in Asia, where markets tumbled as much as 5 percent on Friday.
Slumping markets also prompted container leasing company China Shipping Nauticgreen to shelve its Hong Kong IPO of up to HK$1.5 billion ($192.3 million), said IFR, a Thomson Reuters publication. The deal was set to be priced on Aug. 10.
The moves signal an uphill climb for companies in Asia-Pacific, the top global venue for IPOs, as they gear up to raise nearly $90 billion from stock sales.
The outlook for raising capital will be "naturally weak as appetite evaporates", said Singapore-based Christopher Wong, senior investment manager at Aberdeen Asset Management Asia.
Everbright Bank, which in late June had already postponed the launch of the offering because of market conditions, was slated to begin a roadshow next week ahead of a planned listing on Aug. 18, sources with direct knowledge of the plan told Reuters.
The lender could slash the deal to between $2.5 billion to $3 billion, said IFR. The bank has secured $1.2 billion from so-called cornerstone investors and may head back to the market in September, IFR said.
An Everbright Bank spokeswoman in Hong Kong was not immediately available for comment.
BOFA'S CCB MOVE EYED
Prolonged market turmoil will also make it difficult for Bank of America to exit its $17.5 billion stake in China Construction Bank , which is locked up until the end of August, analysts and bankers said.
There were expectations BofA would sell at least half its stake to boost its capital.
"Definitely you need some stability in the markets before investors look at deals again," said an equity capital markets banker who couldn't speak publicly on the matter. "People are in a capital-protection mode now."
Equity issuance in the region excluding Japan rose 3.5 percent to $109.1 billion in the first half of the year, the second-highest for the six-month period since 2007, according to Thomson Reuters data. Companies have unveiled plans for IPOs and follow-on deals of nearly $90 billion, the data showed.
Chinese banks and insurance companies alone had planned to raise up to $35.4 billion in share offerings in Hong Kong and China by the end of the year to bolster their balance sheets and fund lending growth, according to Thomson Reuters calculations.
Large non-financial offerings include a $2.5 billion IPO by China Sinohydro Group Ltd, the builder of the Three Gorges dam, and Great Wall Motor Co Ltd , which has won approval to raise about $500 million in an offering in China.
China Everbright Capital, China International Capital Corp, Morgan Stanley , JPMorgan Chase & Co , UBS , BNP Paribas SA , BOC International, HSBC and Shenyin Wanguo were hired to manage the Everbright Bank offering. ($1 = 7.801 Hong Kong dollars)
