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Emerging markets drive IPO activity in second quarter of 2008
Tough market conditions remain as IPO activity is significantly down year-on-year
LONDON, KYIV, 11 JULY 2008 — Global initial public offering (IPO) activity has fallen significantly year-on-year but was relatively stable in the second quarter of 2008 compared with the first three months of the year, according to the quarterly Global IPO update from Ernst & Young.
In the second quarter of 2008, a total of 258 IPOs worldwide raised US$37.4 billion in capital. This compares with 247 IPOs worth US$41.2 billion in the prior quarter. However, compared with the same quarter in 2007 total capital raised fell by 59% (from US$90.4 billion to US$37.4 billion) and the number of deals more than halved (from 567 to 258). In addition, data from Dealogic shows that more IPOs have been postponed or withdrawn in the first six months of 2008 (177) than in 2007 overall (169). Emerging markets continued to drive activity in the second quarter with China Including Hong Kong leading the way in both value (US$6.2 billion) and volume (56 IPOs). Seven of the top 10 and 15 of the top 20 IPOs by capital raised were from emerging markets. Four countries accounted for half of the capital raised globally: China (US$6.2 billion); Brazil (US$4.6 billion); United States (US$4.3 billion); and Saudi Arabia (US$3.4 billion). The most active countries in terms of number of deals were China (56); Poland (21); and Australia, South Korea and India (17).
Gil Forer, Global Director of IPO initiatives at Ernst & Young, says: "Emerging markets are replenishing the deal pipeline at a time when IPO activity in mature markets is decreasing due to the continuous impact of the credit crunch, high market volatility and economic slowdown. In the second quarter of this year, emerging markets accounted for 76% of capital raised - reflecting confidence in continued economic growth."
Leading industries by number of deals include materials, industrials, and technology. By capital raised, the dominant sectors were energy and power, materials, and financial. The top three IPOs by capital raised were OGX Petroleo e Gas Participacoes (Brazil); Al Inma Bank (Saudi Arabia); and New World Resources BV (Czech Republic).
The most active exchanges this quarter were the Australian exchange (ASX), the Alternative Investment Market (AIM) and the Hong Kong Stock Exchange (HKEx). By capital raised the top three exchanges were the London Stock Exchange (LSE), New York Stock Exchange (NYSE) and the Euronext.
"The fact that postponements and cancellations have risen so sharply reflects the current climate of economic uncertainty and it is difficult to see this landscape changing in the next two quarters at least," says Gil Forer. "But while global activity is slowing down, the IPO pipeline remains strong and it is likely that those who have withdrawn or postponed IPOs will revisit their plans once market conditions improve."
In 2008, four CIS companies raised capital through IPOs in London. Ukrainian Myronivsky Khliboproduct raised US$323 million, Ukrainian Cadogan Petroleum raised US$271 million, Russian GlobalTrans raised US$449 million, and Kazakh Sunkar Resources raised US$66 million on the AIM. The Q2 results are significantly lower than the record results for 2007 and 2006. However, the second quarter shows a positive dynamic compared to the Q1 2008.
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