China Dominates Global IPO Activity

China’s growth story continues to fuel global IPO fundraising which picked up in Q3, despite market volatility and fewer deals launched. The US$22.1b mega IPO of the Agricultural Bank of China was the largest ever, making up almost half (42%) of total IPO funds raised globally last quarter.

 

In the third quarter, global IPOs raised a total of US$52.7 billion in 286 IPOs, (compared with US$46.8 billion raised in 311 listings in the previous quarter), according to Ernst & Young’s Q3 2010 Global IPO update. Investors grew more cautious in Q3 amidst the economic uncertainty, however, despite some challenging high-profile debuts, 84% of global IPOs in Q3 were priced within their initial filing range2, while 4% priced above.  Global IPO activity in the first three quarters of 2010, US$152.7b raised in 888 deals, has already exceeded total yearly 2009 levels, (US$112.6b in 577 listings).

 

In Q3, Asian issuers accounted for 83% of dollar volume, (US$43.8b in 173 IPOs). Chinese issuers alone made up over three-quarters (76%) of global fundraising (US$40.1b in 110 deals -- a 147% increase in total proceeds from Q2).

 

The emerging markets accounted for half of the top 20 IPOs in Q3. All of these deals were from Asia: China (8), Indonesia (1), and India (1). In Q3, out of the top 20 IPOs, ten IPOs were from developed markets: the United States (3), the United Kingdom (2), Canada (2), the Netherlands (1), Germany (1) and Australia (1).

 

In 2010, IPO volumes on the Shanghai and Shenzhen stock exchanges reached their highest levels ever. Due primarily to the Agricultural Bank of China dual listing in Shanghai and Hong Kong in Q3, the Shanghai Stock Exchange raised the most capital (US$15.6b), followed by Hong Kong Exchanges and Clearing, which raised US$14.0b (30% and 27% of global capital raised, respectively). The Shenzhen Stock Exchange ranked third by dollar volume (19%), with US$10.0b funds raised.

 

A wide variety of companies sought a public listing in the quarter. The financial sector was the most active, representing over half (51%) of all funds raised (US$26.8b in 24 IPOs), evidence of keen investor interest. The second most active sector was the materials sector (US$5.7b raised in 64 IPOs), reflecting emerging market demand for commodities. In third place was the industrials sector (US$5.7b in 52 deals), which clearly benefited from government stimulus packages worldwide targeting infrastructural development. In fourth place was the high - performing technology sector, (US$4.5b raised in 36 IPOs), which experienced revenue growth even during the economic downturn.

 

 

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