Follow-ons drive 2014 Asia-Pacific equity offerings

But total amount down 14% YoY.

Follow-on offerings drove capital markets activity by Asia-Pacific banks in the first eight months of 2014, while IPOs remained tepid.

According to a research note from SNL Financial, during the period, SNL-covered Asia-Pacific banks brought to market 59 equity offerings, one short of the total number in the same period in 2013.

In value terms, however, the total amount offered through the end of August dropped 14% to US$14.89 billion from US$17.36 billion in the prior-year period.

The primary driver of the decrease was an 87% decline in the total amount of preferred equity issuance, although there were four such offerings in eight months through Aug. 31, compared to three in the same period in 2013.

Here’s more from SNL Financial:

In the first eight months of 2013, Australia-based National Australia Bank Ltd.'s US$1.57 billion offering of convertible preferred shares, which closed March 19, 2013, was the largest preferred equity issuance.

That was followed by a US$732.7 million private placement of preferred stock by Japan's Kansai Urban Banking Corp., which closed July 25, 2013. By comparison, the average size of preferred stock offerings so far in 2014 is only US$87.1 million.

For common equity, the largest year-to-date offering came from Malaysia's Public Bank Bhd., which on July 18 completed a US$1.52 billion rights offering.

The bank plans to use the proceeds from the sale to shore up its capital to fund growth and meet Basel III requirements.

The company issued 350,212,513 new shares at the equivalent of US$4.34 apiece, giving existing shareholders the right to receive 1 new share for every 10 shares they held.

The second-largest offering in 2014 was Hongkong & Shanghai Banking Corp. Ltd.'s US$1.39 billion common stock offering completed June 27.

The Hong Kong lender issued about 4.29 billion shares at the equivalent of 32.25 U.S. cents each, and similarly to Public Bank, the bank plans to use the proceeds to meet Basel III capital requirements.

State Bank of India in January closed a US$1.28 billion follow-on offering, the third-largest common equity sale and the largest follow-on offering in 2014 by an Asia-Pacific lender.

Like its peers in the region, State Bank of India will use the new funds to augment its capital adequacy ratio and for general corporate purposes.

China's Harbin Bank Co. Ltd. is the only SNL-covered Asia-Pacific bank that went public in 2014. In a March IPO, the bank raised US$1.13 billion, which Harbin Bank said will be used to strengthen its capital base and support business growth.

With the share sale, Harbin Bank became the fourth Chinese lender since November 2013 to list shares in Hong Kong, instead of China. Chinese regulators lifted a ban on domestic IPOs in late 2013, which had been enforced as part of efforts to restore investor confidence by curbing fraud and irregularities.

Rounding out the top five common equity offerings year-to-date through Aug. 31 was a US$1.07 billion follow-on offering by Malaysia-based CIMB Group Holdings Bhd., which was wrapped up Jan. 22.

Combined, the five largest offerings accounted for slightly more than 45% of total equity raised through the end of August, and the group includes all year-to-date deals larger than US$1 billion.