BANKERS in Asia are betting on newly-listed companies returning to the markets for fresh capital as last year’s flood of initial public offerings (IPOs) slows to a trickle, with 2019 seeing the weakest start in equity sales in three years.

Equity sales in the region, including IPOs, convertible bonds and follow-on sales, fell 41 percent to US$49.1 billion in the first quarter of the year, Refinitiv data show, the slowest since 2016.

Fees from equity capital market (ECM) deals have reached US$966 million so far, bankers’ worst quarterly haul in six years.

The data make for a sobering read after 2018 when Asia’s red-hot markets hosted many multi-billion dollar IPOs, including SoftBank Corp.’s US$23.6 billion Tokyo float and Xiaomi’s US$5.4 billion one in China’s Hong Kong.

But bankers hope some of the gloom will be lifted as many of the companies that went public last year return for additional capital, making 2019 less a year of jumbo IPOs and more of follow-on capital raisings and convertible bonds.

“We are already seeing companies that went public last year coming back ... with follow-on offerings,” said Goldman Sachs’ David Binnion, co-head of equity capital markets of Asia ex-Japan.

“In many situations these follow-on financings are coming sooner after listing than we have historically seen, reflecting the capital-intensive nature of these growth companies.”

Many firms that went public last year raised less than they had aimed for as investors pushed back against lofty valuations.

That will further drive follow-on activity, bankers said.

Chinese electric vehicle maker NIO, video streaming company iQIYI and e-commerce firm Pinduoduo, all 2018 IPOs, have come back to the market to raise funds.

NIO raised US$750 million in a five-year convertible bond this year, four months after it went public in New York, while iQIYI raised US$1.1 billion in six-year convertible bonds last week in its second such issue within a year of its IPO.

Asian companies have sold US$21.3 billion in convertible bonds so far, a record for this point in any year.

After a blockbuster IPO year for Asia in 2018, led by the Hong Kong exchange that hosted deals worth US$36.3 billion — its best year in eight — 2019 is expected to be much slower.

The largest IPO in Asia this year so far was the US$687 million float of Embassy Office Parks REIT in India, the country’s first real estate investment trust IPO. (SD-Agencies)