Strong global IPO market in Q1 sets tone for 2010
Asian markets still dominate listings although European IPOs return London, 8 April 2010 – Global IPO activity in the first quarter of 2010 showed substantial improvement over Q1 2009. Results were driven by an ongoing robust Asian market and the revival of European listings, according to Ernst & Young’s Q1 2010 Global IPO update.
In Q1 2010 there were 267 deals globally worth US$53.2 billion, compared to the 52 deals which raised US$1.4b in Q1’09 (which had the lowest IPO activity in the past decade). Asia continued to experience significant IPO activity in the quarter, with 166 IPOs raising US$35.1b, this constitute 62% of the quarter’s deal numbers and 66% of the quarter’s total IPO fund raising. Nine of the twenty largest IPOs were from Asia (China, Japan and South Korea).
Gregory K. Ericksen, Global Vice Chair for Strategic Growth Markets for Ernst & Young says: “Emerging market activity continues to be strong, but we also saw a revival of activity in Q1 in key markets such as Tokyo, London, Paris and Frankfurt. Despite concerns about volatile market conditions at the beginning of this quarter, we expect that investors will continue to return to the European and North American markets as the global economy improves.”
European IPOs pull ahead of the US
Despite the postponement of a number of high profile listings in January, European investors’ confidence returned later in the quarter with three major deals raising more than US$900 million each. These large deals contributed significantly to total funds raised of US$8b, up 708% on Q1 2009 and up 21% on Q4 2009. Across Europe there were 39 IPOs, the highest number since Q2 2008. Although US firms raised capital with a total value of US$4.2b and 25 deals, both figures represented a decline on Q4 2009.
Q1 continued appetite for IPOs in Asia
The largest IPO in Q1 was Dai-ichi Life Insurance Co Ltd, which listed on Tokyo Stock Exchange in March at US$11b. This is the biggest IPO since the US$19.7b Visa IPO in March 2008 and the largest Japanese IPO since NTT DoCoMo’s listing in 1998. China continued to lead global activity with 109 deals (accounting for over 41% of total deals globally), and raising US$19.4b (37% of global fund raised). In Q1, India completed 20 IPOs listing on Bombay Stock Exchange which raised US$1.2b and Brazil conducted 5 IPOs which raised US$3.3b locally on the Bovespa.
“Fast growth companies from emerging markets continue to list on their local stock exchanges. Exchanges in China, India and Brazil are now mature enough to source funding for the very largest companies seeking listings” says Ericksen.
IPOs by sectors
The leading sectors by funds raised were from the financial1 sector (particularly insurance companies), which raised US$16.4b (in 16 IPOs); materials2 sector with US$10.2b and the industrials3 sector with US$7.9b. The leading sectors by number of deals were from the materials (53 deals), industrials (51 deals) and high technology4 industries (38 deals raised US$4.8 billion).
Future outlook
Ericksen concludes “In Q2, we expect another strong quarter for the IPO market across Asia, US and Europe. There is plenty of activity planned. Issuers are currently waiting for the right window of opportunity to complete their listings to generate better IPO pricing. With the global capital markets becoming more stable, coupled with a strong IPO pipeline and market liquidity, we forecast 2010 global IPO activities will continue to be strong.”
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Notes to editors
Ernst & Young is among professional services organizations with IPO competency centers in key markets around the world, providing consistent, high quality professional services to the global IPO market.
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1‘Financial’ includes insurance, brokerages and banks.
2‘Materials’ includes metals & mining; chemicals; construction materials; containers and packaging; paper and forest products.
3‘Industrials’ includes automobiles and components; building/construction and engineering; construction materials; machinery and other industrials; transportation and infrastructure.
4‘High technology’ includes electronics, semiconductor, software, IT consulting and services.
