Companies across the world raised $28.5 billion through initial public offerings (IPOs) during July-September period of 2011,with the Asian region accounting nearly half of the total amount garnered,according to a report by Ernst & Young.
The report said that Asia will continue to lead global IPO activity in the coming quarters as well. A total of 284 deals raised $28.5 billion via IPOs in the third quarter of calender year 2011 compares to $65.6 billion mopped-up via 383 IPOs in the preceding quarter. This represent a 26 per cent decrease in deal count and 57 per cent drop in capital raised,the report noted. In the third quarter of 2010,there were 302 IPOs which raised $52.5 billion.
The situation indicates that there has been a lull in the primary market scenario across the world.
Asian issuers continue to dominate IPO activity in the quarter with 138 deals,raising $13.5 billion altogether 47 per cent of global funds garnered. However,this is the lowest level of capital raised by Asian issuers since Q2’2009,when $3 billion were raked in via 44 deals. In addition,European firms completed 69 deals,which raised $8.8 billion (31 per cent of global funds raised),this was significantly less than Q2 2011 ($21.7 billion in 96 deals).
Further,North American region raked in $4.5 billion in 41 deals (16 per cent of global fund raised) as compared with $11.6 billion raised with 55 deals in the second quarter.
“The third quarter results show that the Eurozone and US debt crisis have had a deep impact on the IPO market and on both issuers and investors’ confidence. There are,however,many very good businesses still waiting to go public.
“Companies have not stopped seeing IPOs as a way of raising capital. They are waiting for markets conditions to improve,while continuing to prepare for their IPO,” E&Y Global Strategic Growth Markets Leader Maria Pinelli said.
In the third quarter,there were only 3 deals which raised over $1 billion. Besides,average deal size decreased to $100 million in third quarter of this year compared to Q2 2011 ($171 million). Among the sector,financials sector raked in a total of $6.8 billion from 16 deals,followed by materials ($5.8 billion from 72 deals) and industrials ($4.3 billion from 48 deals).