Global IPO activity sustains momentum in Q2 despite market volatility
- PE backed IPOs make a comeback - European and US listings revive with several US$1b plus deals London, 7 July 2010 – Global IPO activity in the second quarter of the year showed signs of resilience despite current market conditions, both in terms of funds raised and number of deals. Listings were mainly driven by a strong Asian market and also by increased listings in the US and Europe according to Ernst & Young’s Q2 2010 Global IPO update and the Global IPO trends report 2010.
In Q2 2010, 301 IPOs globally raised US$46.1b. In Q1 2010 there were 289 IPOs valued at US$52.8b. In the first six months of 2010, a total of 590 companies worth US$98.8b went public – compared to 134 deals worth US$11.8b in the first half of 2009.
Gregory K. Ericksen, Global Vice Chair for Strategic Growth Markets for Ernst & Young says: “The market for IPOs has been challenging mainly due to the ongoing volatility in global stock markets on the back of the sovereign debt crisis. However, we are seeing a significant increase in the interest of the number of companies proceeding with a listing. Asia, offering huge opportunities for growth, continues to be leading the world in the recovery of the capital market.”
Globally, the largest IPO this quarter was Samsung Life Insurance Co Ltd, which listed on Korea Stock Exchange in April, raised US$4.4b. In Q2, Asia continued to dominate global listings, raising US$25.7b (65% of the global market) with 159 deals, compared with US$35.4b and 172 IPOs in the previous quarter. Excluding last quarter’s largest IPO, the US$11b Dai-ichi Life Insurance Co Ltd listing, Q1 to Q2 values were marginally up in Asia. The IPO market is still very much driven by China’s 9% GDP growth, robust economy, corporate earnings, and rising domestic consumption by Shenzhen’s new exchange (ChiNext) aimed at attracting small-cap listings.
Private equity backed IPOs make significant contribution
Out of the top 20 IPOs this year, five of them were PE-backed companies, with transaction sizes of over US$1b. New PE-backed listings included Amadeus IT Holding SA (listing in Madrid at US$1.9b), Kabel Deutschland GmbH and Brenntag Holding GmbH (listing in Deutsche Borse at US$1.0b and US$1.0b respectively), and Chr. Hansen Holding A/S (listing in Copenhagen at US$907m), thus contributing to the overall IPO activity.
“Many of the deals are coming from growth industries, including the technology, media and entertainment and healthcare sectors. Issues in these sectors are being oversubscribed between three to five times, illustrating the current market demand,” continues Ericksen.
Q2 sees more European and US listings
Poland led the way in terms of IPO activity in Europe launching 20 IPOs, which raised US$4.1b – compared to US$42m in 14 deals in Q1 2010. Two of the 10 largest IPOs globally were from Poland. Powszechny Zaklad Ubezpieczen SA, which listed on Warsaw stock exchange in May raising US$2.7b, was the second largest IPO in Q2, while Tauron – Polska Energia SA, was the sixth largest at US$1.3b. With 3.5% GDP growth forecast in 2010, the Polish economy held up better than most Central and Eastern European countries through the recession, with solid private and public consumption growth forecast to grow steadily.
Other major global markets which showed significant increase in activity when compared to Q1 include: the US which raised US$4.7b (33 IPOs), India raising US$2.9b (8 IPOs) and Spain raising US$1.9b (3 IPOs), compared to US$4.2b, US$1.2b, and US$22m respectively.
Ericksen continued: “Europe and the US improved in Q2, and are contributing to the global IPO market recovery, both in terms of deals number and sizes of transactions. In the first half of 2010, Europe represented 18% of the global capital raised, with more European listings taking place in Poland, France, UK, Germany and Spain. North America carried about 12% of the global capital raised, with three IPOs listings in the top 20 global IPOs.”
IPOs by sectors
The leading sectors by funds raised were financial, especially insurance companies, which raised US$8.2b (in 12 IPOs), the energy & power sector with US$7.9b and the industrials sector raised, US$5.8b. Materials and industrial companies were also highly active, reflecting emerging market demand for commodities (55 deals worth US$4.1b were launched by materials companies).
Future outlook
Ericksen concludes “We have seen some positive signs of IPO activity in the past six months, and we remain confident that the IPO market will grow over the next two quarters. Many issuers are awaiting the window of IPO opportunity to secure more favorable pricing.”
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About the report
After extensive interviews with word’s top investment bankers and stock exchange leaders, data analysis, research and Ernst & Young’s annual Global IPO Trends Report 2010 reviews the major developments in the worldwide IPO markets in 2009 and the first half of 2010. As the seventh annual global IPO report produced by Ernst & Young, this review offers an in-depth examination of the key trends for companies planning an IPO today, as well as CFO perspectives on IPO readiness. The report will be launched on 14 July and available from
www.ey.com/GL/en/Services/Strategic-Growth-Markets.
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