Asia Pacific continues to dominate IPO activity in Q3’11 with 57% market share

In Q3'11, Asia Pacific issuers continue to dominate global IPO activities
Asia Pacific will continue to lead global IPO activity as domestic and foreign IPO pipeline builds
Emerging markets made up around 67% by global number of deals and 60% by capital raised in Q3'11 (while Asia Pacific made up of 57%)

Hong Kong, 13 October 2011 — Asia Pacific continues to dominate IPO activity in Q3'11 with 57% by number of deals and with 49% by capital raised. Asia Pacific issuers completed 161 deals in Q3'11 which raised US$14b in total. European issuers completed 69 deals which raised US$8.8b (31% of global funds raised), significantly less than Q2'11 (US$21.7b in 96 deals) while remaining higher than Q1'11 with US$2.4b raised in 52 deals. North American issuers raised US$4.5b in 41 deals (16% of global funds raised) compared with US$11.6b raised with 55 deals in Q2'11 (18%).

Emerging markets made up around 67% by global number of deals and 60% by capital raised in Q3'11

Emerging markets made up around 67% by global number of deals and 60% by amount of capital raised in Q3'11. Asia Pacific accounted for 57% with Greater China comprising 32% with 90 deals, followed by Australia with 8% or 23 deals while India and South Korea shared the third place, each accounted for 4% with 12 deals.

Of the top 10 Global IPOs by capital raised, 6 deals were from emerging countries. Commenting on Asia Pacific's position in the growth of Emerging Markets, Keith Pogson, Managing Partner, Asia-Pacific Financial Services for Ernst & Young says: "If we look at the top 20 Global IPOs by capital raised, Emerging markets represent 6 of the top 12 IPOs and 12 of the top 20 IPOs while 4 out of the 20 deals were private equity-backed IPOs."

Global IPO activity down 57% in Q3 with just 3 IPOs over US$1 billion

Global IPO activity has fallen sharply in Q3'11, according to Ernst & Young's Q3 Global IPO update. In Q3' 11, a total of 284 deals raised US$28.5b, compared with 383 deals worth US$65.6b for Q2'11 (a 26% decrease in number and 57% drop in capital raised).

In Q3'10, a total of 302 IPOs raising US$52.5b, a 6% decrease in number and 46% in capital raised compared to Q3'11. There were only 3 deals raising over US$1 billion in this quarter globally. The global average deal size was US$100m in Q3'11, compared to US$171m in Q2'11.

22 IPOs have been postponed and 49 withdrawn in Q3'11– there were 20 and 76 respectively for Q2'11. This is mainly due to market volatility. However, approximately 9 out of 10 global IPOs¹ were priced within or above their initial filing range in Q3'11 – this is similar to Q2'11 and Q1'11.

Pogson comments: "The Q3'11 results show that the Eurozone and US debt crisis have had a deep impact on the global IPO market and on both issuers' and investors' confidence. There are, however, many very good businesses still waiting to go public. IPOs are still considered by companies as a way of raising capital. They are waiting for market conditions to improve, while continuing to prepare for their IPOs."

IPOs by stock exchanges

The top exchange by funds raised in Q3'11 was the Shenzhen Stock Exchange (SME and ChiNext) (US$5.5b, 56 deals). The second exchange was the Bolsa de Madrid (US$5.3b, 5 deals). This was mainly due to this year's third largest and this quarter's largest IPO of Spanish Commercial Bank, Bankia, which raised US$4.4b. The third exchange by capital raised was the Shanghai Stock Exchange (US$3.1b, 9 deals).

IPOs by sectors

By funds raised, the top three sectors remained financials (US$6.8b from 16 deals), materials (US$5.8b from 72 deals) and industrials (US$4.3b from 48 deals). "Although these three sectors remain robust, we are waiting for many private-equity backed IPOs in the US pipeline, especially in the technology sector," says Pogson.

Future outlook

"Asia will continue to lead global IPO activity as domestic and foreign IPO pipeline builds. As soon as the market stabilizes, we will start seeing a big wave of IPOs, as there is currently a record amount of about 3,000 companies in the pipeline globally. The dominant trend in Europe's IPO markets will continue to be state-owned enterprises. We have seen recently examples of European countries taking SOEs public. Governments need to act quickly to help lower market volatility and restore investor confidence for the IPO market to recover," says Pogson.

¹Analysis focused on open-price IPOs with deal value above US$50 million that are priced above, below or within their initial filing range.

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Notes to editors
'Financials' includes banks, brokerage, asset management, credit Institutions and insurance.
'Materials' includes metals, mining; chemicals; construction materials; containers and packaging, paper and forest products; and other materials,
'Industrials' includes automobiles and components; building/construction and engineering; construction materials; machinery and other industrials; transportation and infrastructure.

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