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 Russias VTB Bank, which raised US$8.0 billion, some way short of Chinese bank ICBCs 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 globalization 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, Gil Forer, Global Director of IPO Initiatives at Ernst & Young, 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 years 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.
About the report
The data presented in Ernst & Youngs year-end Global IPO report (the report wasn't available online at the time of our posting but will likely be sometime on Monday, Dec 17 - pre-web routines are hard to change!!) is from Dealogic, Thomson Financial and Ernst & Young. The data focuses on IPOs of operating companies, and we define an IPO as: a company's first offering of equity to the public.
Only those IPOs for which Dealogic, Thomson Financial and Ernst & Young hold data regarding the issue date (the day the offer is priced and allocations are subsequently made), trading date (the date on which the security first trades) and proceeds (funds raised including any over allotment sold) are included. Postponed IPOs or those which have not yet priced are therefore excluded.
