In March our Fund participated in 9 IPOs. That number looks extravagant when put into perspective with the global IPO doldrums and the slowest start to any year since Lehman Brothers collapsed in 2008. Worldwide, only $12.74 billion has been raised among 165 deals in the first quarter, versus $37.66 billion from 273 transactions last year. In the US, 8 companies have raised just $0.7bn, compared with 34 companies that raised $5.5bn in the same quarter a year ago. And still not a single listing on the New York Stock Exchange…

Out of the 2 US companies which succeeded to get listed on the Nasdaq in March, we picked the winner: Syndax Pharmaceuticals (SNDX) gave us a decent 4.17% return. The other one, Corvus Pharmaceuticals (CRVS), opened flat and closed with a 5% loss. It is interesting to note that all of the 8 IPOs listed on the Nasdaq in Q1 2016 were healthcare stocks.

In Europe, several deals have been cancelled, while in London, after a strong start to the year, only one deal materialized: Metrobank. Obviously, a lot of the decisions to float are being delayed until the uncertainty over the UK’s future in the European Union has been lifted.

In  Hong Kong, the public floats of Chinese banks Zheshang Bank and Bank of Tianjin, which were by far the largest globally in the first quarter (proceeds of $1.7bn and $1.2bn), helped cement Hong Kong’s position as the world’s hottest listing destination. Topping London and New York, the city has enabled 10 issuers to raise a total of $3.48 billion so far, obtaining 27.2% of the world’s market share. We were allocated in Bank of Tianjin (1578.HK) shares knowing that the banking sector suffers in Hong Kong from specific rules limiting the pricing options, but on the other hand the cornerstone investors’ presence in the deal was a comforting factor against a steep drop at opening.   We therefore were not very surprised by a flat opening, and we closed our position with a neutral outcome (0%).

Earlier in the month in Hong Kong, we had suffered a loss of -1.65% on the allocation of Union Medical Healthcare (2138.HK). However, these setbacks don’t affect our vision of this stock exchange being a key area of IPO activity and future profits.

Fortunately, our shift in focus to small offerings in Japan paid off in a timely manner. Litalico (6187.JT), a school operator, gave us the second highest return since the inception of our fund: +90%! Global Group (6189.JT), a child care company brought us the ninth highest profit rate ever with +50%, and Yoshimura Food (2884.JP) placed itself at number 11 with +41.14%.

Brass Corporation (2424.JT), a wedding halls operator(!), gave us a more typical return of +12.13%, while Nakamoto (7811.JP) and Akatsuki (3932.JP) netted 0% and -4.20% respectively. This reminded us the caution required when dealing with small offerings in a peculiar and small market.

Looking forward, we are preparing for a worldwide surge of public listings that many are foreseeing for the rest of the year, and that many more are praying for. Anyway, the second quarter cannot be worse than the first in terms of number of deals in most of the world, and even if the much awaited rebound happens, we will continue to cherish those small Japanese IPOs which stay the course regardless of the markets’ volatility while bringing us such exceptional returns.

Our fund’s Year to Date total shareholder return is now +7.43%.