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Foreign IPOs In US: Post-Election Ramifications

With skepticism toward international trade and possible domestic protectionism, president-elect Donald Trump could introduce uncertainty over foreign companies' participation into the U.S. initial public offering market. Foreign company issuance of IPOs in the U.S. marketplace has, over the past several years, accounted for a significant slice of IPO underwriting in the U.S.   Since 2010, more than one-sixth of the 921 completed IPOs in the U.S. were by foreign companies. In fact, the top two IPOs priced in the U.S. this year came from foreign issuers: a $1.4 billion offering by Chinese delivery company ZTO Express and a $1.13 billion offering by Japanese mobile messaging firm LINE Corporation.

Those issues have helped in part to propel foreign company IPOs to account for 29% of the $15.9 billion in IPO underwriting to date this year, the second highest proportion of foreign company IPO proceeds since 2010.  In fact, since 2000, foreign company IPOs priced in the U.S. accounted for more than 10% of annual IPO underwriting in each year with three exceptions: 2008, 2010 and 2012. Furthermore, with five of the six Chinese IPOs priced this year in the U.S. experiencing price declines in the immediate aftermath of yesterday’s election results, the prospects of forthcoming foreign company IPOs in the U.S. could be impacted until uncertainty is removed among market participants. Such a development could adversely impact U.S. underwriters in the IPO market and, to a certain extent, asset managers who may have large holders of foreign company IPOs.

Foreign IPOs in the US - Percent of Issues

Foreign IPOs in the US - Percent of Proceeds

Leading Chinese IPOs priced in US 2016YTD - post election performance

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