Global IPO recovery in second half of 2009 led by China and Brazil

Value of deals in 2009 at parity with 2008, Asian markets dominate listings

LONDON, 8 DECEMBER 2009 – After stagnant markets in the first two quarters, IPO activity started to pick-up in the second half of 2009, principally driven by deals from  Asia and South America. These two regions have raised US$68.6 billion in listings so far in 2009 accounting for 72% of the total IPO value, according to Ernst & Young’s year-end Global IPO update.

The number of deals for the 11 months is dramatically down in 2009, with only 459 IPOs listing so far in 2009 (compared to 740 deals for the same time period in 2008). However, from 1 January to 30 November 2009, the capital raised globally was US$94.9 billion, which is at parity with the amount raised in the 11 months of 2008 (US$94.6 billion). Ernst & Young forecasts that the value of IPOs by year end for 2009 should exceed US $100bn. 

Gregory K. Ericksen, Global Vice Chair Strategic Growth Markets for Ernst & Young says: “Emerging market activity has dominated IPO markets this year with Chinese companies the largest source of total funds raised globally. Brazil’s stock market has seen a flurry of activity, notably in financial services. China and Brazil are clearly playing an integral role in leading the global economic recovery.”

Capital shifts accentuated by the recession

IPO activity in North America declined in value by nearly 38%, from US$26.6 billion in the 11 months in 2008 to US$16.6 billion with 66 IPO listed so far this year. European IPOs only accounted for 10% of total IPO deals and a modest US $5.0 billion in value. This compares with 22% of total value of IPO deals last year, with 160 IPOs raising US$13.6 billion. Deal value and activity has also fallen dramatically in the Middle East from US$13.1 billion from 51 deals in the eleven months of 2008, to US$2.1 billion in the same period in 2009, with only 16 IPOs recorded.

However, we did see some significant activity in the US in the second half of 2009 and finally in Europe in Q4 with some high profile listings received well by the market.  
 
IPOs by sectors and stock exchanges

The leading sectors by number of deals were industrials¹ (77 IPOs); materials² (68); and high technology (55). The following three sectors (out of 12) accounted for 50% of total capital raised: financials (US$21.7 billion), industrials (US$16.1 billion) and real estate (US$9.5 billion).

The top three IPOs by capital raised were Banco Santander Brazil SA, the largest IPO this year and the largest in Brazilian history, which raised US$7.5 billion, China State Construction Engineering Corp, which listed in Shanghai in July at US$7.3billion, Metallurgical Corp of China Ltd (US$5.2 billion on the Shanghai and Hong Kong stock exchanges). Of the top 10 IPOs, six are from emerging markets.

By funds raised, the top three exchanges for the year to date are the Hong Kong Stock Exchange, which accounted for 18.7% of capital raised (US$17.7 billion); New York Stock Exchange 17.9% (US$16.9 billion) and Shanghai Stock exchange for 17.0% (US$16.1 billion). The top three exchanges by deal activity are the Shenzhen stock exchange (73 IPOs); Hong Kong Stock Exchange (47) and KOSDAQ stock exchange (46).

Ericksen concludes, “Dynamic companies from emerging markets continue to list on their local stock exchanges. The principal exchanges in China, India, Brazil and other emerging markets are now mature enough to source funding for the very largest companies seeking listings.”

Notes to editors

Ernst & Young is unique among professional services firms with IPO competency centers in key markets around the world, providing consistent, comprehensive professional services to the global IPO market. 

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