Large global firms are looking east to access emerging market investors, where sovereign wealth funds and secondary listings in Hong Kong are being sought as a source of capital, finds a new poll by BNY Mellon.
According to the Global Trends in Investor Relations survey, sovereign wealth funds are firmly in the sights of capital-seeking companies, with the Government of Singapore Investment Corporation ranking as the most popular, having met 38% of survey respondents in the past three years.
Other Asian and Middle Eastern sovereign funds also featured prominently, including the Abu Dhabi Investment Authority, which met 32% of firms polled, Temasek Holdings (17%), China Investment Corp and Kuwait Investment Authority (16% each), Qatar Investment Authority (8%) and Dubai Group (6%).
A quarter of companies say they have not met any sovereign wealth funds, although they are interested in doing so. However, they are a minority group, as 59% of businesses have engaged with at least one sovereign investor in the past three years.
Another source of capital-raising is hedge funds, which have met 92% of companies polled - roughly the same as last year.
However, engagements with hedge funds comprise only 18% of investor meetings among respondents from Asia, Eastern Europe, Middle East and Africa, compared with 29% from North America.
The discrepancy likely stems from a greater fear of short-selling among companies listed in more volatile markets.
A respondent from a mid-cap company in the survey notes: "[A] lot are long/short and that means if they walk out of the meeting thinking the stock is overvalued they will short the stock. That can put selling pressure on the company's valuation."
Gregory Roath, head of Asia-Pacific for BNY Mellon's depositary receipts division, points out that global companies seeking business growth are increasingly heading to Greater China.
According to the survey, a secondary listing in Greater China is being considered by 31% of companies from developed markets in the 'mega-cap' category - defined as those with market capitalisations of more than $25 billion. That compares with 28% which were considering doing so in 2010.
This point is notable for the fact that the poll was conducted between June and August this year - around the time of the summer secondary listings of Samsonite and Prada on the Hong Kong stock exchange.
"Hong Kong and China appear to be the most popular destinations to list a secondary offering," notes the survey, which polled 650 companies across 53 countries, with respondents representing a wide range of market caps and sectors.
"Listing in Hong Kong is an excellent way to access investors across the entire region," says Roath, who adds that companies that are considering a secondary listing opportunity in the city are aiming to "create greater visibility within Asia and among investors across the region".
The Shanghai Stock Exchange's proposed international board is also gaining interest among companies, says Roath.
Many survey respondents indicated that they were closely following developments of the board, which was first announced in 2009 and would provide a platform for foreign companies to list and offer yuan-denominated shares on the mainland.
Chinese authorities have not given a timeframe for the board's launch, although market watchers predict it is at least one to two years away.