PRINT THIS PAGE The IPO market 200621/02/2007. Source: Ernst & Young. 
No fewer than 29 countries each hosted more than $1bn worth of IPOs last year, marking a globalisation trend set to continue through 2006, according to Accelerating Growth, the third annual Global IPO Trends Report released by Ernst & Young. IPO activity continues to reflect the shifting landscape of the world economy. While a key trend in 2005 was an increase in IPOs in China, Israel, Russia and Poland, the outlook for 2006 shows an increased interest in markets including the Middle East, South Korea, India and Brazil.
“For many large investors, a global strategy that does not include China, India and Russia has become a contradiction in terms,” Gregory K. Ericksen, Global Vice Chair of Strategic Growth Markets at Ernst & Young, said. “However, the landscape is continuing to widen and we now see a healthy pipeline of IPO candidates waiting in the wings in markets around the world. A wide global spread of IPO activity, a mix of types of offering — both privatizations and new ventures, energetic growth in emerging markets, and vigorous competition for new business by the world’s stock exchanges all bode well for the IPO supply in 2006.”
The report, combining data from Ernst & Young and Thomson Financial with the views of representatives from stock exchanges and banks around the world, reveals that issuers have increasingly diverse strategies and needs, and stock exchanges are specializing to differentiate themselves and meet them.
Highlights of the survey include:
Capital raised around the world rose by one-third to hit $167 billion, the highest level since 2000, while deal numbers remained steady at 1,537, compared to 1,516 in 2004.
2005 was a watershed year for IPO activity in the Middle East and Africa: soaring liquidity from oil revenues contributed to many big ticket IPOs raising more than $500 million each.
In the next few years, assuming the necessary political stability, the Middle East is likely to become an important source of IPO activity as oil revenues are recycled into the local economy.
Asia continues to be a hotbed of activity. Towed along by mainland China and Hong Kong’s continuing strength, other economies in the area displayed vigorous IPO activity.
One of the three biggest deals to date this year was Lotte, the South Korean Department Store, which raised $3.5 billion when it dual-listed in London and Seoul.
Many Indian IPOs have been oversubscribed 20 to 30 times in markets that have been scaling record levels. Following Jet Airways’ successful launch — one of the most successful Indian IPOs of recent times — a number of state-run airlines are poised to float in the near future.
In Latin America, Brazil saw an increase in both the amount of capital raised and the number of transactions on the previous year. Brazilian companies currently account for one-third of all Latin American listings on the New York Stock Exchange.
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