Wed, Oct 26, 2016
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. M&A - U.S. hedge fund HarbourVest is shock winner in the £1.1bn SVG Capital takeover saga, Hedge fund Parvus shows hand, toppling William Hill merger deal[more]

    U.S. hedge fund HarbourVest is shock winner in the £1.1bn SVG Capital takeover saga From The fierce battle to buy Britain's biggest private equity group has come to an unexpected conclusion, with the original bidder walking away with the prize. SVG Capital has agreed

  2. Marc Lasry: Energy is still a phenomenal opportunity[more]

    From Distressed debt specialist Marc Lasry said energy debt is still a "phenomenal opportunity" because investors can get "massively overpaid" for the risk they take on. There are "huge opportunities" in the energy sector especially in restructurings, the Avenue Capital Group CEO said Tues

  3. Opalesque Exclusive: Ex-SAC manager re-emerges with market neutral hedge fund[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: A manager re-emerged from the SAC battleground last year to launch his own hedge fund under the umbrella of New York-based investment firm Endicott Group.

  4. North America - Hedge-fund manager Kyle Bass says the U.S. is on track for stagflation, Billionaire hedge fund titans Dinan, Lasry on election, markets and best investment ideas[more]

    Hedge-fund manager Kyle Bass says the U.S. is on track for stagflation From Kyle Bass, founder of Hayman Capital Management, on Wednesday warned that the U.S. is headed toward so-called stagflation. Stagflation is typically described as persistently high inflation and hi

  5. David Einhorn speaks on passive investing, Mylan, his cheapest stock, the Fed[more]

    From Greenlight Capital hedge fund manager David Einhorn (Trades, Portfolio) joined nine other famed investors on Tuesday to talk about stocks at the annual Great Investors’ Best Ideas Investment Symposium in Dallas. Presenters at the annual conference typically pitch one or severa