Q3 IPO activity up, boosted by Chinese companies
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Despite market volatility and fewer deals, the global initial public offering market grew in the third quarter, according to corporate advisory firm Ernst & Young's latest report.
In the third quarter, 286 IPOs raised US$52.7 billion, up from US$46.8 billion in the second quarter that had 311 listings.
Chinese companies dominated the market, accounting for 76 percent of the total raised. They raised US$40.1 billion from 110 deals – a 147-percent increase over the second quarter's total proceeds.
Among them, the Agricultural Bank of China's US$22.1-billion IPO was the largest, making up 42 percent of the total global IPO funds raised during the July to September period.
Asian companies accounted for 83 percent of global IPO fundraising, or US443.8 billion in 173 IPOs.
IPO fundraising on the Shanghai and Shenzhen stock exchanges hit record highs this year. The Shanghai stock exchange leads the world in IPO fundraising for 2010, at US$15.6 billion, followed by Hong Kong at US$14 billion – due mainly to ABC's dual listing on the two markets. The Shenzhen stock exchange ranked third with US$10 billion raised.
"In upcoming quarters, Shanghai is expected to maintain its current status as the world's leading exchange for capital raised, evidence of its growing liquidity and maturity," said Terence Ho, an China analyst for Ernst & Young.
Investors grew more cautious in the third quarter, the report shows, with 84 percent of the global IPOs priced within their initial filing range. Still, many growth-seeking companies are still eager to go public. More companies have launched IPOs in the first three quarters of 2010 than in all of 2009. This year, 888 IPOs have raised US$152.7 billion, while last year saw only US$112.6 billion raised from 577 deals.
"After two years of waiting for the window of IPO opportunity to open, companies are accepting less aggressive valuations, expecting to return to the capital market at a later date and raise more funds through follow-on offerings," said Ho.
The report said financials, metals and mining, industrials and technology were the most active sectors in IPO. Financial companies, including insurance, brokerages and banks, represented more than half of all funds raised (US$26.8 billion from 24 IPOs). Materials, covering metals, mining, chemicals, containers and packaging, paper and forest products, raised US$5.7 billion from 64 IPOs, reflecting an emerging demand for commodities. "We have seen a gradual improvement in IPO markets in the past nine months," Ho said. "Assuming the macroeconomic environment continues to stabilize, we anticipate that global IPO markets will improve."
