Global IPO activity down 57% in Q3 with just 3 IPOs over US$1 billion
- Average deal size globally decreased to US$100 million
- 87% of global IPOs in Q3’11 priced within their initial filing range
MOSCOW, LONDON, 5 OCTOBER 2011 – Global IPO activity has fallen sharply in Q3 2011, according to Ernst & Young’s Q3 Global IPO update. So far this quarter, a total of 284 deals raised US$28.5b, this compares with 383 IPOs worth US$65.6b for Q2’11 (a 26% decrease in number and 57% drop in capital raised).
Whereas in Q3’10, there was 302 IPOs which raised US$52.5b (a 6% drop in number and a 46% decrease in capital raised compared to Q3 2011). This quarter globally, only 3 deals raised over US$1 billion. Average deal size decreased in many markets in Q3’11 compared to Q2’11. The global average deal size was US$100m in Q3’11, compared to Q2’11 (US$171m).
Data from Dealogic shows that 22 IPOs have been postponed and 49 withdrawn in Q3 2011, this was 20 and 76 respectively for Q2’11.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 for Q2’11 and Q1’11.
Maria Pinelli, Global Strategic Growth Markets Leader at Ernst & Young comments: “The third quarter results show that the Eurozone and US debt crisis have had a deep impact on the IPO market and on both issuers and investors’ confidence. There are, however, many very good businesses still waiting to go public. Companies have not stopped seeing IPOs as a way of raising capital. They are waiting for markets conditions to improve, while continuing to prepare for their IPO.”
“Russian/CIS IPO activity has been impacted by global volatility. A number of Russian/CIS IPOs have been postponed, creating a significant backlog of companies which intend to list once confidence in the markets returns. Investors are keen to invest in rapid growth markets, and Russian/CIS companies will be using this time to prepare for IPO and potentially increasing their valuations when the IPO window opens again”- Aaron Johnson, CIS IPO Leader added.
Asia continues to dominate IPO activity but is losing momentum
Asian issuers continue to dominate IPO activity in Q3 with 138 deals, which raised US$13.5b altogether (47% of global funds raised). However, this is the lowest level of capital raised by Asian issusers since Q2’09 (US$3.0b in 44 deals). European issuers completed 69 deals, which raised US$8.8b (31% of global funds raised), this was significantly less than Q2’11 (US$21.7b in 96 deals). Q3’11 activity remains higher than Q1’11 with US$2.4b raised 52 deals. North American issuers raised US$4.5b in 41 deals (16% of global fund raised) compared with US$11.6b raised with 55 deals in Q2’11 (18%).
IPOs by stock exchanges
The top exchange by funds raised in Q3 was Shenzhen Stock Exchange (SME and ChiNext) (US$5.5b, 56 deals). The second exchange is 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 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 Maria.
“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,” concludes Pinelli.
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1 Analysis focus on open-price IPOs with deal value above US$50 million that is priced above, below or within their initial filing range.