Asia Dominates IPO Listings

A robust Asian market and the revival of European listings, drove global IPO activity in the first quarter of 2010, which showed substantial improvement over Q1 2009, according to Ernst & Young's Q1 2010 Global IPO Update.


Global IPO activity in the first quarter of 2010 showed substantial improvement over Q1 2009. Results were driven by an ongoing robust Asian market and the revival of European listings, according to Ernst & Young's Q1 2010 Global IPO Update.


In Q1 2010, there were 267 deals globally worth US$53.2 billion, compared to the 52 deals which reaised $1.4b in Q1 2009, which had the lowest IPO activity in the past decade. Asia continued to experience significant IPO activity in the quarter, with 166 IPOs raising $35.1b. This constituted 62% of the quarter's deal numbers and 66% of the quarter's total IPO fund raising. Nine of the 20 largest IPOs were from Asia (China, Japan and South Korea).


The largest IPO in Q1 was Dai-ichi Life Insurance Co Ltd., which listed on Tokyo Stock Exchange in March at $11b. This is the biggest IPO since the $19.7b Visa IPO in March 2008 and the largest Japanse IPO since NTT DoCoMo's listing in 1998. China continued to lead global activity with 109 deals (accounting for over 20 IPOs listing on the Bombay Stock Exchange, which raised $1.2b. Brazil conducted five IPOs, which raised $3.3b locally on the Bovespa.


"Fast-growth companies from emerging markets continue to list on their local stock exchanges. Exchanges in China, India and Brazil are now mature enough to source funding for the very largest companies seeking listings," says Terence Ho, Ernst & Young's strategic growth markets leader for Greater China.


In the Chinese Mainland A-Share market, the Shanghai Stock Exchange and the Shenzhen Stock Exchange hosted 92 IPOs in Q1, raising RMB118.6 billion, which is over 60% of the total funds raised of RMB 187.9 billion of the whole year in 2009. Fifty-percent of the IPO funds raised is from 82 deals of the Shenzhen Stock Exchange's Small and Medium Enterprise board (SME) and the ChiNext, and an equal amount is raised from 10 deals of the Shanghai Stock Exchange.


"It shows that the Chinese government is encouraging more fast-growing small and medium- sized companies to raise funds through IPOs. This trend will continue," comments Ho.


Ho notes that there were 13 new IPOs on the Hong Kong Stock Exchange in Q1 2010, raising HK$33.7 billion — an increase of over twentyfold over the same period last year. Total funds raised in Q1 2010, however, only represent 18.2% of the total funds raised in Q4 2009, with total funds raised of HK$185 billion from 38 IPOs.


The leading sectors by funds raised were from the financial sector (particularly insurance companies), which raised $16.4 billion (in 16 IPOs); materials sector with $10.2b, and the industrials sector with $7.9 billion. The leading sectors by number of deals were from the materials (53 deals), industrials (51 deals) and high technology industries (38 deals raised $4.8b).


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