Average Global IPO Down 57pc in Q3
The average global deal size has decreased by 57 percent to US$100 million while 87 percent of global IPOs in the third quarter of 2011 have priced within their initial filing range.
This was according to Ernst & Young’s Q3 Global IPO update. In the third quarter, a total of 284 deals raised US$28.5 billion, compared with 383 deals worth US$65.6 billion for the second quarter of 2011, a 26 percent decrease in number and 57 percent drop in capital raised.
In the third quarter last year, a total of 302 IPOs raised US$52.5 billion, a 6 percent decrease in number and 46 percent in capital raised compared to the same period this year. There were only 3 deals raising over US$1 billion in this quarter globally. The global average deal size was US$100 million in the third quarter of 2011, compared to US$171 million in the second quarter of 2011.
Twenty-two IPOs have been postponed and 49 withdrawn in the third quarter – there were 20 and 76 respectively for Q2’11, according to Dealogic.
This is mainly due to market volatility, Ernst & Young said. However, approximately 9 out of 10 global IPOs were priced within or above their initial filing range in the third quarter, similar to that of the second and first quarter of 2011.
Terence Ho, Greater China Strategic Growth Markets Leader for Ernst & Young comments: “The Q3’11 results show that the Eurozone and US debt crisis have had a deep impact on the global IPO market and on both issuers’ and investors’ confidence.
“There are, however, many very good businesses still waiting to go public. IPOs are still considered by companies as a way of raising capital. They are waiting for market conditions to improve, while continuing to prepare for their IPOs.”
Asia continues to dominate IPO activity but is losing momentum.
Asian issuers dominated the IPO activities in the third quarter of 2011 with 138 deals, which raised US$13.5 billion in total (47% of global funds raised).
However, this is the lowest level of capital raised by Asian issusers since the second quarter of 2009 (US$3.0b in 44 deals).
European issuers completed 69 deals, raising US$8.8 billion (31 percent of global funds raised), significantly less than the second quarter of 2011 (US$21.7 billion in 96 deals) while remaining higher than the first quarter with US$2.4 billion raised in 52 deals.
North American issuers raised US$4.5 billion in 41 deals (16 percent of global funds raised) compared with US$11.6 billion raised with 55 deals in the second quarter this year (18%).
The top exchange by funds raised in Q3’11 was the Shenzhen Stock Exchange (SME and ChiNext) (US$5.5 billion, 56 deals). The second exchange was the Bolsa de Madrid (US$5.3 billion, 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$4.4 billion.
The third exchange by capital raised was the Shanghai Stock Exchange (US$3.1 billion, 9 deals).
By funds raised, the top three sectors remained financials (US$6.8b from 16 deals), materials (US$5.8 billion from 72 deals) and industrials (US$4.3 billion 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,” Ho said.
“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,” Ho added.
“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,” he said.