Initial Public Offerings (IPOs) worldwide surged in the second quarter of 2007 with $88-billion raised in 531 IPOs, making this the second most active quarter of the last five years, both in number of IPOs and capital raised, according to the inaugural quarterly Global IPO Report from Ernst & Young.
Stef Greeff, associate director for transaction advisory services at Ernst & Young says: “In South Africa, there were 12 IPOs totalling R2,415-billion ($331-million) of capital raised in South Africa for the first half of 2007. Six IPOs took place in each of Q2 and Q1 of 2007. Capital raised in Q2 was R1,03-billion ($144-million), down from Q1 levels where R1,378-billion ($188-million) of capital was raised through IPO activity. Four of the IPOs for Q2 were on the flourishing Alt-X and the other two on the main board of the JSE.”
The number of listings globally was up 40% on the first quarter of 2007 and 16% on the second quarter of last year, while the amount of capital raised rose 144% on the previous quarter and 42% on the same quarter last year. Much of this activity was driven by the emerging markets; Brazil, Russia, India and China together raised $35-billion in 90 IPOs and accounted for four of the five largest IPOs in the second quarter, the researchers noted.
“Three of the Q2 IPOs [accounting for more than 80% of the capital raised] were done in terms of ‘book-building’ processes which are thought to extract more value for the company in terms of increased pricing. The risk associated with these is however potential depressed prices in the after market and two of the companies are currently trading at levels below their IPO price”, said Greeff. – I-Net Bridge