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Saturday 7 November 2009
China, tech sector, private equity could be IPO drivers: poll
China, technology and private equity are expected to drive global initial public offering (IPO) activities over the next 12 months, the latest survey by Ernst & Young LLP shows.
China, tech sector, private equity could be IPO drivers: poll
Survey based on responses from over 300 institutional investors
By LYNETTE KHOO
China, technology and private equity are expected to drive global initial public offering (IPO) activities over the next 12 months, the latest survey by Ernst & Young LLP shows.
The poll, based on responses from more than 300 institutional investors globally, found that investors expect the IPO markets in emerging countries to recover first from the downturn.
Some 75 per cent of the respondents expect the Chinese IPO market to show recovery by the end of 2009, followed by 57 per cent for both India and Brazil.
About 31 per cent of the investors polled foresee a recovery in the US IPO market by the end of this year and 30 per cent suggested Singapore.
But for many developed markets such as the UK, Australia, Germany and Canada, more than half of the respondents expect their domestic IPO markets to start recovering between the first and second quarters of 2010.
Ernst & Young quarterly IPO data have shown a global recovery in the third quarter, during which some mega Chinese IPOs drove the total value of IPOs globally to US$37.8 billion - a 292 per cent surge from a quarter ago and the highest level since the second quarter of 2008.
In Singapore, the IPO market has also stirred back to life, with nine IPOs raising total funds of about $213.44 million in the third quarter, up from three IPOs that raised $16.84 million in gross proceeds in the first-half. Another five IPOs raised a total of $69.28 million in October.
‘Recent IPO activity in the last two quarters confirms that some IPO markets are making an early recovery, notably in the emerging economies of China, India and Brazil,’ said Max Loh, Assurance Partner and IPO leader, Ernst & Young LLP in Singapore. ‘Although the rest of the world appears to be picking up, full recovery will take longer and we don’t expect markets to stabilise for another 12 months,’ he added.
The respondents listed five top industries that could recover first. Forty-nine per cent of investors believe that the technology sector will lead the way, followed by financial services (43 per cent), the oil and gas sector (38 per cent), metals and mining (35 per cent), consumer and retail (32 per cent). Private equity-backed companies are predicted to go public first in the United States according to 47 per cent of the respondents.
The top financial factors cited by respondents when making an IPO investment were debt-to-equity ratios, earnings per share growth and sales growth. Debt-to-equity ratio has risen from ninth position in the 2008 survey to be the top-most factor this year.
Greg Ericksen, global vice-chair, Strategic Growth Markets at Ernst & Young, noted that investors are looking for less risky investments, which explains why they are more concerned about whether companies are able to service their interest and debt.
But when the market returns, investors will be looking for companies with a track record of significant growth, he said.
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China, tech sector, private equity could be IPO drivers: poll
Survey based on responses from over 300 institutional investors
By LYNETTE KHOO
China, technology and private equity are expected to drive global initial public offering (IPO) activities over the next 12 months, the latest survey by Ernst & Young LLP shows.
The poll, based on responses from more than 300 institutional investors globally, found that investors expect the IPO markets in emerging countries to recover first from the downturn.
Some 75 per cent of the respondents expect the Chinese IPO market to show recovery by the end of 2009, followed by 57 per cent for both India and Brazil.
About 31 per cent of the investors polled foresee a recovery in the US IPO market by the end of this year and 30 per cent suggested Singapore.
But for many developed markets such as the UK, Australia, Germany and Canada, more than half of the respondents expect their domestic IPO markets to start recovering between the first and second quarters of 2010.
Ernst & Young quarterly IPO data have shown a global recovery in the third quarter, during which some mega Chinese IPOs drove the total value of IPOs globally to US$37.8 billion - a 292 per cent surge from a quarter ago and the highest level since the second quarter of 2008.
In Singapore, the IPO market has also stirred back to life, with nine IPOs raising total funds of about $213.44 million in the third quarter, up from three IPOs that raised $16.84 million in gross proceeds in the first-half. Another five IPOs raised a total of $69.28 million in October.
‘Recent IPO activity in the last two quarters confirms that some IPO markets are making an early recovery, notably in the emerging economies of China, India and Brazil,’ said Max Loh, Assurance Partner and IPO leader, Ernst & Young LLP in Singapore. ‘Although the rest of the world appears to be picking up, full recovery will take longer and we don’t expect markets to stabilise for another 12 months,’ he added.
The respondents listed five top industries that could recover first. Forty-nine per cent of investors believe that the technology sector will lead the way, followed by financial services (43 per cent), the oil and gas sector (38 per cent), metals and mining (35 per cent), consumer and retail (32 per cent). Private equity-backed companies are predicted to go public first in the United States according to 47 per cent of the respondents.
The top financial factors cited by respondents when making an IPO investment were debt-to-equity ratios, earnings per share growth and sales growth. Debt-to-equity ratio has risen from ninth position in the 2008 survey to be the top-most factor this year.
Greg Ericksen, global vice-chair, Strategic Growth Markets at Ernst & Young, noted that investors are looking for less risky investments, which explains why they are more concerned about whether companies are able to service their interest and debt.
But when the market returns, investors will be looking for companies with a track record of significant growth, he said.
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