Top 9 Mega IPOs Expected In 2018

The global initial public offering (IPO) scene is set for a record-breaking year in 2018. Here we take a look at the major listings on tap.


The global initial public offering (IPO) scene is set for a record-breaking year in 2018. Here we take a look at the major listings on tap.

Many stock markets across the world registered phenomenal gains in 2017. Hong Kong’s Hang Seng Index shot up by 35% during the year, while on Wall Street the S&P 500 increased by 19% and the Nasdaq by 28%, and Japan’s Nikkei 225 jumped by 19%.

The growth in stock market valuations provided an incentive to companies to launch their initial public offerings (IPOs). The largest exchange in terms of IPO volume was the New York Stock Exchange, with US$33.4 billion. The second largest exchange in terms of IPO volume was the Shanghai Stock Exchange, followed by the Nasdaq and the Hong Kong Exchange.

According to data released by Dealogic, a financial markets platform, 1,700 companies raised a total of US$196 billion in 2017 by going public – an increase of 44% over the previous year.

With the markets trending even higher this year, many firms are likely to raise funds through IPOs in 2018.

Here we take a look at some of the major listings planned for this year that investors would be wise to watch out for:

SPOTIFY

Although music streaming company Spotify has not confirmed its plans, indications are that it will list on the New York Stock Exchange in the first half of this year.

Spotify has 60 million paying subscribers and another 80 million who have downloaded its advertisement-supported version, which is free to use.

In 2015, Spotify raised funds at a valuation of US$8.5 billion. Its current value is estimated at US$15 billion. The company has reportedly already confidentially filed for a public listing.

TENCENT MUSIC

Tencent Music – Chinese internet giant Tencent’s music streaming and downloading service – ­has twice as many paying customers as Spotify. Alex Yao, a Hong Kong-based analyst at JPMorgan Chase, an American multinational financial services company, says that Tencent has a far better business model than Spotify.

According to media reports, the company will list either in New York or in Hong Kong at a valuation of approximately US$10 billion.

Li Yujie, an analyst with RHB Research Institute, remarked:
“Tencent Music has a dominant status in China. It would make sense to spin off the unit, allowing it to create strategic alliances and unlock value for investors. It could be one of the most-anticipated IPOs next year.”


CHINA TOWER

China Tower is the infrastructure-sharing joint venture between China Mobile, China Unicom, and China Telecom. The company was established in 2014 to prevent the duplication of towers by these three telecom firms.

China Tower has plans to raise up to US$10 billion through an IPO in 2018, and has appointed China International Capital Corp Ltd and Goldman Sachs to lead the IPO. The company’s shares will be listed in Hong Kong.


AIRBNB

The accommodations-rental platform has already raised U$4.5 billion from investors, and its current value is estimated at U$30 billion. Since its establishment in 2009, Airbnb has grown rapidly and it currently operates in 65,000 cities across 191 countries.

According to a recent tweet by CEO Brian Chesky, the firm facilitated accommodation arrangements for over three million guests on New Year’s Eve last year.

While a 2018 IPO has not been confirmed, Chesky said that in March 2017, the firm was “halfway through a two-year project” to raise money from the public. But he added that he didn’t mean that there would be an IPO in 2018 – “it just means we’ll be ready.”


DROPBOX

It was recently reported that data-sharing firm, Dropbox, has confidentially filed for an IPO, which will take place in the first half of 2018. The company has engaged Goldman Sachs and JP Morgan to handle the listing.

Dropbox was valued at US$10 billion when it raised capital in a private fundraising round in 2014. It boasts annualised sales of over US$1 billion. Commenting on the company’s performance, CEO and co-founder Drew Houston said that Dropbox generates a profit excluding interest, taxes, depreciation, and amortisation.


IQIYI

iQIYI is Chinese search giant Baidu’s video streaming site. It has 481 million active monthly users and over 60 million paying customers. The firm’s IPO, which may take place in 2018, would probably be made at a valuation of US$8 billion to US$10 billion.

In 2016, iQIYI generated revenues of US$1.6 billion – most of which came from advertising. The estimated revenues for 2017 are US$2.4 billion. The video streaming company hasn’t become profitable yet due in large part to the intense competition in this sector. IQIYI competes with Alibaba’s Youku Tudou and Tencent Video.


LUFAX HOLDING

Lufax Holding is the peer-to-peer online lending platform of the Ping An Insurance group. The unit was set up about seven years ago and since then it has granted loans of 432 billion yuan (US$67 billion). It has more than 31 million registered users.

In 2016, Lufax raised funds at a valuation of US$18.5 billion. But the company’s chief operating officer says that its valuation could be twice as much if it is given a price-earnings multiple of 30 to 40 as is the norm with tech firms. Recent reports indicate that the firm may be targeting a valuation of US$60 billion.

In a recent development, government authorities have said that the country’ illegal peer-to-peer lenders will be closed down. This move is expected to boost the prospects of well-established companies like Lufax.

ARAMCO

Saudi Arabia’s oil company, Aramco, is likely to launch its IPO in 2018. It will be valued at US$2 trillion, giving it the highest market capitalisation of any company by far. The world’s biggest stock exchanges are competing for the listing.

The New York Stock Exchange has even received an endorsement from President Donald Trump, who has tweeted, “Would very much appreciate Saudi Arabia doing their IPO of Aramco with the New York Stock Exchange. Important to the United States!”


THE BOTTOM LINE


Global stock markets are likely to see an increased number of IPOs in the coming year. According to CB Insights, a research firm specialising in private company financing, there are 197 unicorns valued at a total of US$697 billion in existence. Even if a small fraction of these companies decide to go public, there will be a sharp increase in IPO volumes in 2018 – provided global stock market valuations continue to hover at their current levels.

This article was originally published by WEALTH, Asia’s marketplace for investors.

Written by
Poppy covers a wide range of topics at Billionaire, having spent the past 13 years at companies including Singapore Tatler, Her World Plus and Harpers Bazaar UK. She has a passion for fashion, jewellery and travel as well as an avaricious fascination with crime novels. Follow her at poppypskinner on Instagram.

 

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