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Derivatives

ABN AMRO Launches IPO-Linked Investments

ABN AMRO has launched four investment structures linked to the IPOX Shuster indices, which track initial public offerings.

ABN AMRO has launched four investment structures linked to the IPOX Shuster indices, which track initial public offerings. Three certificates, one for each of the IPOX-30 Asia-Pacific, IPOX-30 Europe and IPOX-30 U.S. will allow investors access to what ABN considers a separate equity class. A four-year capital guaranteed structured note has also been issued, linked to the performance of a basket of the three indexes. The bank has placed USD10 million so far.

Miles Ashton, head of private investor product sales for Asia, said the launch was "particularly relevant given the size and number of IPOs this year," including USD54.4 billion in Europe for the year-to-date. He said euphoria surrounding the world's largest IPO in China last month, which raised approximately USD20 billion for Industrial Construction Bank of China, is also likely to contribute to demand. ABN is currently working with IPOX to create an IPOX China Index, which it hopes to launch at the beginning of 2007--the current IPOX-30 Asia-Pacific includes Hong Kong, Singapore, Japan, Australia and New Zealand.

The IPOX indices were created following research by the London School of Economics that found that equities have higher returns for the first four years. They include IPOs after the first seven days of going public, which then drop automatically from the index 1,000 days after the offering.

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