Thu, Apr 26, 2018
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Private Equity Strategies

Data Snapshot: Global IPO Market Heats UP

Thursday, March 27, 2014

New research from Ernst & Young shows that the global market for IPOs is heating up after a mixed 2013. There was a total of 239 deals reaching some $44.3 billion in the first quarter of this year. That’s 47% higher since the same time last year and overall capital raised was up 82%. January was stronger than normal, with 101 IPOs raising $18.5 billion, the largest amount of capital raised in the first month for over a decade. In all this quarter is the strongest showing for IPOs since 2011.

Globally, private equity and venture capital were the drivers for this trend with the US and EMEIA reporting 72% and 26% of sponsor-backed IPOs, respectively. Deal sizes are ticking up as well, a trend noted by Quad-C in our Dealmakers Q&A. Average deal sizes are 24% higher than the same time last year and six deals have already come in at a price tag over $1 billion. Sources say that larger firms are willing to move down to smaller sized transactions than they normally would in an effort to find new ways of deploying capital. Report data shows that given the high level of activity in the sector, investment opportunities and exits are also seeing amplified interest from players looking for any opportunity.

Not all IPOs are created equal however, markets made that abundantly clear with the $KING IPO. Despite that, developed markets are putting up the strongest showing in terms of the number of successful IPOs and IPO activity in general. South America and Asia are coming in behind them with slightly weaker numbers.

“Although economic fundamentals are less compelling in Asia, where the unwinding of US tapering is causing repatriation of investments and the slowdown in Chinese manufacturing held Asian equity indices back. IPO performance was nevertheless strong,” the report says. “Asia-Pacific accounted for 47% by global deal number and 41% of global deal value. Seven of the quarters 20 largest IPOs were on Asian exchanges.”

The sectors leading this trend are energy, technology and real estate. Sources tell us that a number of funds that have been involved in traditional venture capital are expanding slightly to get into maturing companies or come in as part of a syndicate deal. Some of these firms were involved in past titans of the internet like Facebook and eBay before they went public and are looking for a way to find those opportunities again. Others have noted that smaller initial investments due to it being cheaper overall to bring a product to market have made technology more attractive again.

Report data also shows that cross border listings are marking a comeback. “The US continues to attract IPOs from around the world as companies seek to ride the momentum of the US capital markets. There were 11 foreign listings raising US$1.9b in 2014 Q1, which accounted for 16% of US IPO numbers and 16% by deal value. We expect to see a higher number of cross-border IPOs in the remainder of 2014 from China, Europe and the rest of the world,” authors write.

“The fact that investors are willing to back disruptive innovative businesses with high risk/reward profiles is a definite sign of how strong the US IPO market is right now,” says Jackie Kelly of Ernst & Young. “We think disruptive companies in healthcare, technology and energy sectors will continue to drive deal activity through 2014.”

Maria Pinelli one of the authors of the report thinks the trend could have legs that last longer than just this year - indeed European advisors are even actively pushing companies to list. “We expect Q2’14 and the second half of 2014 will extend the sharp growth trajectory established in Q1’14. Geopolitical shocks aside, with sound economic fundamentals and strong global liquidity fuelling new listings, the global pipeline is looking extremely healthy. We believe that IPO activity will come from a broad range of geographic markets and from multiple sectors,” she says.

 
This article was published in Opalesque's Private Equity Strategies our monthly research update on the global private equity landscape including all sectors and market caps.
Private Equity Strategies
Private Equity Strategies
Private Equity Strategies
Private Equity Strategies


Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Sequoia takes Facebook stake as shares slide in data controversy, $1.4b hedge fund sees intact fundamentals for Facebook, Jim Cramer reveals some 'suggested hedge fund trades' amid the Trump tariffs[more]

    Sequoia takes Facebook stake as shares slide in data controversy From Bloomberg.com: The $4.2 billion Sequoia Fund bought a small position in Facebook Inc. as the stock slid late in the first quarter, investment manager Ruane, Cunniff & Goldfarb told clients. "The recent controversy enab

  2. Activist Investors - Blue Sky-owned Wild Breads faces uncertain future[more]

    From AFR.com: A Blue Sky private equity investment in artisan-style baker Wild Breads enjoyed multiple valuation upgrades despite losing millions and breaching its lending covenants, accounts lodged with the regulator last week show. Wild Breads lost $2.4 million in 2017, but Blue Sky ascribed a hig

  3. Opalesque Exclusive: Barnegat to close hedge fund to outside investors on weak opportunities[more]

    Komfie Manalo, Opalesque Asia: Bob Treue's Barnegat Fund Management said it is closing its $666m fixed income relative value hedge fund to outside investors. "The negative side to gains in Fixed Income Arbitrage is that unless we find new opportunit

  4. Investing - Hedge fund makes a big bet on malls, British hedge fund manager Odey short UK government bonds on QE bet[more]

    Hedge fund makes a big bet on malls From Barrons.com: The dominant narrative on American shopping malls is that they're dead. Crushed by Amazon.com, many brick-and-mortar retail stores are destined for bankruptcy. And where is the most retail, clustered all together? Malls. From a

  5. Performance - Hedge funds suffer first back-to-back loss in two years, Netflix performance burns hedge fund short sellers, Macro hedge fund up 14.5% in first quarter sees dollar falling, Renaissance Technologies rebounds across hedge funds in March[more]

    Hedge funds suffer first back-to-back loss in two years From Bloomberg.com: Hedge Fund returns sank for a second straight month in March, the first back-to-back loss since the first two months of 2016, as trade wars, tech-sector woes and a Fed rate hike dragged down the S&P 500 from its