Global firms rush for IPOs in US despite declining volumes

New York stock exchangeNon-US companies are completing more initial public offerings (IPOs) on American exchanges, even though trading volumes of non-US shares have fallen.

In the first six months of the year, more than $3.6 billion (€2.7 billion) was raised on US exchanges in 20 issues of depositary receipts, which represent foreign firms' publicly traded shares, says BNY Mellon in a mid-year update.

This was nearly three times the $1.25 billion raised in depositary receipt offerings in the first half of 2012.

High profile issues included the first Chinese IPO completed in the US this year, of online retailer LightInTheBox, and the issuing of depositary receipts by electronic payment processor QIWI, the first Russian company to do so on the Nasdaq.

“Taken together with the record highs reached by US markets earlier this year, these initial public offerings may be seen as ‘green shoots’ for a recovery in emerging equities that have been depressed by low interest rates for some time,” says Christopher M. Kearns, chief executive of BNY Mellon's depositary receipts business.

However, the volume of depositary receipts traded in the first half of the year was 10% less than in the first half of 2012, and the value of traded depositary receipts was down 16%.

US-based investors, who are the key market for foreign companies seeking an American IPO, reduced their holdings of depositary receipts by 8.9% over the same period. BNY Mellon says the decline was “largely driven by exits from emerging markets”.

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