"With the recent spate of Chinese companies delisting from US exchanges, issuers should identify and avoid common pitfalls in order to complete a listing on favorable terms," said Tom Rice, Securities Partner in New York. "It takes a significant commitment to make a listing successful. For example, Chinese companies that have maintained a US listing have made a commitment to the transparency required by US regulators, and they also keep seasoned financial professionals with public company experience in the CFO's office."Additional highlights from the survey include:
- Listing abroad is attractive for both emerging and developed markets. Cross-border listings have historically been dominated by companies from emerging markets, which look abroad to stock exchanges with established investor bases and high liquidity. The majority of investment banker respondents (61%) expected this trend to continue. However, as capital markets mature in many parts of the world, companies from developed economies are increasingly considering raising capital abroad in order to access a new pool of investors.
- Mid-sized companies are most likely to list on a foreign exchange. Although there have been a number of highly publicized cross-border listings by large multinational companies in recent years, a majority of investment bankers (52%) believe that mid-sized companies (market capitalization of US$250 million to US$1 billion) are most likely to list on an exchange outside of their home jurisdiction.
- Beyond increased liquidity, other factors are influencing cross-border listings. Corporate respondents' top three reasons for choosing to list on a particular foreign exchange all relate to market liquidity and the ability to realize value from their listing through investor base (98%), favorable price-to-earnings multiples (92%), and economic status of the exchange's jurisdiction (83%). However, in reviewing survey results, Baker & McKenzie found that other factors are also encouraging companies to list abroad, such as the time required to list, raising their profile with investors and their customer base, and the industry focus of particular exchanges.