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Global IPO activity fallen by more than half since 2007
LONDON, KYIV, 10 DECEMBER 2008 – Global IPO activity has more than halved since 2007, according to Ernst & Young’s year-end Global IPO update. During the first 11 months of 2008, a total of 745 IPOs worldwide raised US$95.3 billion in capital. This compares with 1,790 IPOs over the same period in 2007, which raised US$256.9 billion in capital.
Full-year figures for 2008 are expected to follow this downward trend, and will compare with a record-breaking 1,979 deals and US$287.1 billion in capital raised over 2007. Data from Dealogic shows that 298 IPOs have been postponed or withdrawn in 2008 to date compared with 167 during the full year 2007.
IPO activity has also fallen in emerging markets. BRIC markets recorded 163 deals and US$28.0 billion in capital raised in the first 11 months of 2008. This compares with US$106.8 billion and 365 deals over the same period in 2007. In the CIS, only six IPOs have been held in 2008 (three Ukrainian, two Kazakhstani, and one Russian company). All IPOs were held on foreign exchanges. The figures for 2007 were 30 IPOs held raising a total of US$34 billion.
Asian IPOs have generated the most capital this year to date (US$29.7 billion) with Greater China accounting for 60% of funds raised in this region. North America raised US$27.0 billion and the Middle East & Africa US$15.9 billion - primarily driven by Saudi Arabia, which accounts for 60% of funds raised there. By number of deals, the most active regions are Asia (337 IPOs); Europe (161) and North America (91).
Gil Forer, Global Director of IPO initiatives at Ernst & Young, says: "Challenging market conditions have clearly impacted investor confidence and willingness to list at this present time. But despite a slow-down in actual listings, the pipeline of companies preparing to make the transition from private entity to public enterprise remains robust.
"This strong pipeline reflects the fact that the IPO journey is widely understood as a lengthy transformational process. In fact, our research has shown that executives of outperforming companies start preparing to list a full 12 to 24 months before going public. Clearly it is difficult to predict when IPO activity will recover and capital markets need first to stabilize in order to re-build confidence. However, many companies will use current market conditions to fully prepare themselves to take advantage once the IPO window re-opens."
The leading sectors by number of deals were materials (183 IPOs); industrials (105); and high technology (81). The top three sectors (out of 12) accounted for 63% of total capital raised: financials (US$26.2 billion), energy and power (US$ 18.3 billion), and materials (US$16.0 billion).
The top three IPOs by capital raised were Visa Inc, the largest US IPO in history, which raised US$19.7 billion on the New York Stock Exchange; China Railway Construction Corp Ltd (US$5.7 billion on the Shanghai and Hong Kong stock exchanges); and the Brazilian energy company OGX Petroleo e Gas Participacoes SA (US$4.1billion on the Sao Paulo stock exchange). Of the top 20 IPOs, 15 are from emerging markets. The deal threshold required to make the top 20 has fallen significantly since 2007. In 2007, the minimum deal value required to make the group (for the full year) was US$1.9 billion; the group threshold for the 11 months to 30 November 2008 is US$0.85 billion.
By funds raised, the top three exchanges for the year to date are the New York Stock Exchange, which accounted for 26.3% of capital raised (US$25.1 billion) and was buoyed by the Visa Inc listing; London Stock Exchange (5.8% capital raised, US$5.5 billion); and Hong Stock Exchange (5.0%, US$4.8 billion). The top three exchanges by deal activity are the Australian Stock Exchange (65 IPOs); AIM London (27) and Hong Kong Stock Exchange (23).
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