Global IPO Activity On The Rise
Monday, July 18, 2011

Global IPO fundraising activity rose by 39% in the second quarter compared to the first quarter of 2011 and increased by 38% compared to the second quarter of 2010, according to new research by Ernst and Young.

In Q2 2011, 378 IPOs globally raised a total of USD64.6bn, says Ernst & Young’s Q2 2011 Global IPO update. Asian exchanges still dominated listings this quarter, with 163 IPOs raising USD27bn, (42% of global capital raised) followed by European (27%), and North American exchanges (24%).

However, Asia’s current lead now falls far short of its dominance in Q3 2010 when Asian exchanges made up 81% of global capital raised.

The top three sectors globally were the materials, industrials and energy accounting for 45% of IPOs total value.

“Reflecting the huge pent-up demand for capital, we saw a continued strength in Asian capital markets and continued revival of IPOs across Europe and North America, led by IPO deals from the materials, industrials, energy and technology sectors,” says Maria Pinelli, Global Vice Chair for Strategic Growth Markets for Ernst & Young.

Internet IPOs have been driving the 2011 US IPO market, the report notes, while non-technology offerings have often seen lacklustre demand. Of the 46 IPOs completed in the US worth USD13.8bn, 14 deals raising USD4.9bn have been by technology companies, or roughly 36% of the total US IPO volume. The largest high technology IPO in Q2 was the NASDAQ listing of Russia’s most popular search engine Yandex, which raised USD1.43bn.

“The social networking revolution will drive the price of social media IPOs, while its valuation model will continue to be refined” says Pinelli.

In Q2, European exchanges saw a huge 534% rise in capital raised (USD17.7bn raised in 95 IPOs) compared to the first quarter (USD2.8bn raised in 54 deals) thanks to Glencore’s listing in London. Among European exchanges, the London Stock Exchange raised the most capital (USD12.6bn) with 21% of capital raised coming from Russian issuers. The largest global as well as European IPO so far this year was the USD10bn IPO of Swiss commodities trader, Glencore International, which listed on the London and Hong Kong stock exchanges.

Asian exchanges completed 163 deals which raised USD27bn, an 11% rise in capital raised compared to Q2, 2010. The largest IPO on Asian exchanges in Q2 was the USD2bn listing of Italy’s luxury fashion retailer Prada on the Hong Kong Stock Exchange.

The Hong Kong Stock Exchange in Q2 raised USD11.3bn in 19 deals, while the Shanghai and Shenzhen Stock Exchanges (SME and ChiNext) raised USD10.3bn in 77 deals altogether.

“Chinese IPO activity has slowed down, with investors restrained by Chinese inflationary concerns over commodity prices and housing prices,” says Pinelli. “Even so, the Chinese IPO pipeline is still very strong, containing large state-owned enterprises, and mid-cap companies.”

“Despite the continued uncertainty of a global economic recovery, the IPO remains at the heart of many companies’ growth strategy,” concludes Pinelli. "As the global IPO pipeline continues to build up, we expect a strong second half for new offerings from high profile issuers, notably from the US and Europe.”