March 11, 2012 / 9:45 AM / 6 years ago

JPMorgan pins hopes on IPO recovery in China

BEIJING (Reuters) - Twice as many firms in China are eager to list on the stock market now compared to a year ago as rising Asian share prices rebuild confidence among businesses, the head of JPMorgan’s investment arm in the country said on Saturday.

Employees walk past the company logo at the JPMorgan Beijing office in Beijing December 13, 2010. REUTERS/Jason Lee

Fang Fang, chief executive officer for JPMorgan China Investment Banking (JPM.N), said companies were mulling an array of fund-raising plans from initial public offerings (IPO) to sales of high-grade and high-yield bonds.

“Companies are all very tempted to come to the market now,” Fang said in an interview in Beijing. “As we stand, the (IPO) pipeline today is almost double of the pipeline we had at this time last year.”

Steelier risk appetites from companies allowed JPMorgan to handle more bond deals in China in January and February than the first six months of last year combined, said Fang.

Choppy financial markets had dented banks’ profits last year as bankers struggled with trading losses and falling investing and lending activities. Goldman Sachs’ (GS.N) Asian arm, for instance, swung into a loss in 2011 from a year-ago profit.

Fang declined to reveal how much money JPMorgan would like to earn from China this year except to say the bank wanted to grow its revenues from 2011, when its income fell from all-time highs struck in 2010.

ThomsonReuters data showed JPMorgan ranked fourth in equity and bond underwriting, and merger and acquisition deals in Asia Pacific excluding Japan last year, behind UBS UBSN.VX, Goldman Sachs and Credit Suisse CSGN.VX. JPMorgan had ranked second in 2010.

Fang said the U.S. bank’s revenues in January and February in China were less than forecast, but added he was hopeful they would improve between March and June when more firms get going with their IPO plans.

Without quantifying his forecast, Fang said JPMorgan could benefit from Chinese and European firms wanting to do more business with one other in the wake of Europe’s debt crisis.

For instance, he said JPMorgan last year advised on the 3 billion euros purchase by China’s sovereign wealth fund China Investment Corp CIC.UL of a stake in French utility firm GDF Suez.

Ambitious Chinese firms seeking to dramatically improve their technology, branding and manufacturing increasingly shop around in Europe for assets. Likewise, cash-poor European companies see wealthy Chinese firms as a natural port of call.

Fang said Chinese companies were finessing the way they courted European firms, which sometimes rebuffed investment from China on fears their cash masked political motives.

“I see Chinese companies becoming more mature in transacting deals there. They are no longer asking for upfront control in many cases,” Fang said, adding they were now more skillful in negotiating for “significant” minority stakes.

(The story corrects title of CEO in first, second and fourth paragraphs)

Reporting by Koh Gui Qing and Kang Xize; editing by James Jukwey

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