Global IPO activity reaches record levels in 2007 -
Ernst & Young:
Emerging markets drive activity; China leads the way
Global initial public offering (IPO) activity reached record levels
in 2007, with capital raised at an all-time high and the number of
companies choosing to go public in the first 11 months of this year
exceeding the whole of 2006, according to figures released today by
Ernst & Young.
From January through November 2007, US$255 billion was raised
globally through 1739 IPOs compared to US$246 billion raised in 1729
deals in the whole of 2006.
The year-end spike in IPO activity seen in 2006 looks likely to be
repeated in 2007 with preliminary data for the first two weeks of
December indicating a further US$18 billion raised in 91 IPOs.
This record level of activity has been achieved despite the absence
in 2007 of the mega-deals seen in recent years. The largest IPO of 2007
to date was Russia's VTB Bank, which raised US$8.0 billion, some way
short of Chinese bank ICBC's US$22 billion, the largest IPO of last
year.
IPO activity continues to be driven by the emerging markets, which
accounted for the majority of the largest deals of the year; 14 out of
the top 20 IPOs, compared with nine of the top 20 in 2006. By industry,
financial companies continue to dominate, representing one-quarter of
all funds raised. Industrial and real estate also accounted for some of
the biggest deals of 2006.
Brazil, Russia, India and China, the so-called BRIC countries, have
raised US$106.5 billion in 382 deals so far this year, compared with
US$89.6 billion raised in 302 deals in the same period of 2006.
Of that group China generated more IPOs (209) than Russia, Brazil and
India combined (173).
Worldwide, China, the US and Brazil were the market share leaders by
capital raised with US$52.6 billion, US$38.7 billion and US$29.0 billion
raised respectively. China also led the way in terms of the number of
listings with 209, ahead of Australia and the US with 189 and 178 IPOs
respectively.
The increased activity across the emerging markets stems from the
growth of their economies and the ongoing globalisation of the capital
markets.
This has seen the rise of new world-class financial centers,
investors look further afield for investment opportunities, and the
continuing trend of companies looking to list on domestic exchanges,
almost all of the top 20 IPOs in 2007 went public in their home
countries, Global Director of IPO Initiatives at Ernst & Young Gil Forer
said.
The surge in IPO activity in China is a clear reflection of the
growth in the Chinese economy and the confidence investors have about
putting their money into China, Forer said. Conversely, some of the
mature markets saw a drop in the number of IPOs in the second half of
2007, which could be attributed to the high volatility of the markets.
Unsurprisingly, Asia-Pacific accounted for 46% of IPOs worldwide,
ahead of Europe, the Middle East, and Africa (EMEA) with 35%, and North
America with 14%. EMEA and Asia-Pacific have the greatest market share
of capital raised with 38% and 32% respectively, eclipsing North America
(16%) and Central & South America (14%). The total share of the leading
exchanges was down this year from 51% to 45% by number of listings, and
from 72% to 58% by total capital raised.
Despite accounting for only 4% of the total number of IPOs so far
this year, HKSE was the leading exchange by capital raised, attracting a
13% market share, mainly due to having some of the year's largest
listings, including China CITIC Bank and China Railway. NYSE was ranked
second by capital raised (11%), attracting 3.6% of total listings driven
by a number of large US deals, including Blackstone Group and MF Global.
Although only 2% of IPOs through November listed on LSE, it attracted
10% of capital raised, mainly through a few large Russian deals,
including VTB Bank and Pik Group.
Despite ongoing market uncertainty, the pipeline of IPO-ready
companies looking to list in 2008 looks healthy, especially across the
emerging markets, Forer concluded.
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