Improving macroeconomic conditions drive an improved IPO outlook for 2013
- Global IPO capital raised likely to be 30% year on year higher in Q1 2013
- Malaysian IPO activity to retain its buoyancy in 2013
- Real estate sector leads global IPO activities
Kuala Lumpur, 5 April 2013 – According to EY’s Global IPO update, global IPO activity is up 1% by capital raised and down 42% by deal volume in Q1’2013 (118 IPOs, raising US$18.2b in proceeds), compared to Q1 2012 (204 IPOs raising US$18.0b in proceeds). EY’s Global IPO pipeline analysis also indicates an additional 31 IPOs are scheduled before the quarter’s end and should raise an additional US$5b.
Quarter 1’s largest deal was the listing of a US pharmaceutical business, Zoetis Inc for US$2.6b. Globally, there were five IPOs raising over US$1b, compared to only one in Q1'12 and nine in Q4'12. Average deal size increased 75% to US$154m, compared to US$88.2m in Q1’12. Two IPOs have been postponed and 15 withdrawn in Q1’13.
Maria Pinelli, EY’s Global Strategic Growth Markets Leader comments:
“Q1’13 posted strong results compared to activity this time last year. The pipeline is robust and we are aware of a minimum of 300 new companies globally that are actively preparing to list in 2013. In addition, institutional investors have returned to the IPO markets as an asset class, with more than 82% investing in IPOs in 2012, compared to only 18% who last invested in 2010 and 2011, as evidenced in a recent EY’s study of institutional investors.”
Commenting on IPO activity in Malaysia over the last year, Terence Tan, Partner and Malaysia IPO Leader, EY, Malaysia said: “Malaysia’s IPO market flourished as the fifth largest globally last year, tripling to RM 22.1 billion from RM 6.8billion in 2011. Three key offerings which sparked this rise were Felda Global Ventures Holdings (RM 9.9 billion), IHH Healthcare (RM 6.3 billion) and Astro Malaysia Holdings (RM 4.6 billion). Overall private investment growth last year reached over 20%, driven by strong government support for infrastructure projects.”
US market on positive trajectory, mixed conditions in Europe improves
In Q1’13, US stock exchanges have so far raised US$6.7b from 24 IPOs, accounting for 37% of global capital raised this quarter and making the US the most active region globally. Capital raised was up 4% compared to Q1’12 (US$6.4b from 41 IPOs). If the additional US$1.2b via eight IPOs in the pipeline for the remainder of March is successful, the US will be on par with Q4’12 (US$8.9b from 33 deals).
If stable macroeconomic conditions persist, healthy momentum is expected for the US IPO market for the rest of 2013, provided that exists: a concern for investors. In particular, the real estate, life sciences, technology and oil and gas is expected to lead the US IPO markets - these industry sectors account for more than 50% of the US IPO pipeline.
European stock exchanges have so far raised US$2.7b from 15 IPOs (accounting for 15% of global capital raised this quarter). Europe contributed the second largest IPO globally with the US$1.5b listing of real estate company, LEG Immobilien AG from Germany.
Before the end of March 2013, there were an additional 11 IPOs with expected proceeds of US$2.0b to price before the end of March. If successful, this will increase capital raised by 68% compared to Q1’12 (39 deals raised US$2.9b).
In Europe, IPO activity in Germany, UK and the Nordics is particularly active. Other parts of Europe are not expected to recover until the second half of 2013. Maria Pinelli comments: “Cash strapped governments will likely seek capital through initial public offerings of state-owned enterprises in 2013. In addition, new government initiatives to foster market access for fast-growth firms and entrepreneurs will also be important for the remainder of 2013.”
Asia’s patchy results
Deal volumes have reduced dramatically in Asia in Q1’13. Asian stock exchanges raised just US$5.1b in 58 IPOs, accounting for 28% of global capital raised this quarter. Capital raised was down 38% compared to Q1’12 (US$8.4b raised, from 97 deals) and a 40% drop by deal number.
The decline is due to a halt in listings on Chinese exchanges since November 2012. The new proposal for additional scrutiny of potential listings when markets reopen is likely to slow activity. There were no Chinese IPOs on mainland China exchanges in Q1’13, and a slight reduction in deal volume in Hong Kong (US$1b, from 9 deals) in Q1’13 compared to Q1’12 (US$1.4b via 14 deals).
The IPO markets in Singapore and Japan fared better. Stock exchanges in these markets accounted for 62% of capital raised in the region in Q1’13. Interest in REITs (real estate investment trusts) remained particularly strong. Several large REIT listings, including the US$1.4b Mapletree Greater China Commercial Trust on Singapore exchange and the US$1.1b Nippon Prologis in Japan, were dominant. Attractive yields and tightening market conditions in commercial real estate drove their successful IPO performance.
In Malaysia, strong investor confidence and steady economic growth is expected to keep the country’s IPO performance buoyant over the coming months. Terence comments, “The Malaysian government’s plans for economic transformation, specifically for industries falling under the 12 NKEAs are building a strong pipeline for local and foreign investor support into the country. To date, there have already been three IPOs listed, while other key listings planned for the year include AirAsia X and Malakoff Corporation. With these incoming IPOs, 2013 is shaping into the second consecutive year of encouraging capital growth for the country.”
IPO by sectors
Real estate dominates the IPO sector in terms of funds raised – accounting for over a third (34%) of global IPO activity (US$6.2b) and by number of deals (15%, 18 deals). Reflecting the Zoetis IPO, healthcare (15%, US$2.8b) and industrials (9%, US$1.6b) were also active by capital raised. In terms of number of deals, industrials ranked second (14%, 16 deals) followed by consumer products (10%, 12 deals).
“Real estate IPOs will dominate global activities in Q1’13. We also expect life sciences, technology and oil and gas to lead the US IPO markets. In Europe, real estate and financial services will dominate in terms of the number of deals and Asian markets will continue to see materials, industrials and financial services IPOs streaming into market.” concludes Pinelli.
Notes to editors
1 Data presented in the Q1’13 Global IPO update and press releases are from data provider Dealogic
2 From Right team, right story, right price - Institutional investors support IPOs that come to market well prepared, EY 2013
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