Global IPO market predicted to pick up in 2013

Listings market accelerated in fourth quarter of 2012, with 136 deals valued at $27.3 bn, Ernst & Young update shows

Global IPO activity will accelerate in 2013 as the US economy starts recovering early in the year amid rising stock prices and central bank action worldwide to support equities and the economy, predicts Ernst & Young in its Year-End Global IPO Update.

IPO activity in 2013 will likely start to pick up first with smaller offerings, and then bigger companies will start to launch their own IPOs as economic confidence recovers toward the middle of the year, according to the update.

‘Looking ahead to 2013, we expect a better outlook, with a strengthening US economy leading the recovery, followed in the latter half of the year by Europe and Asia,’ says Maria Pinelli, Ernst & Young’s global vice chair for strategic growth markets, in a statement.

‘Reduced stock market volatility, assertive action from central banks and brighter economic prospects suggest 2013 could be the right time for companies currently in the pipeline to list.’

So far in 2012, IPO activity in terms of capital raised fell by 30 percent compared with 2011 to $118.5 bn, according to the update. In number of IPOs, it fell by 37 percent to 768, although the report noted that some 50 companies are still scheduled to launch IPOs later in December for an expected value of about $6 bn.

This year started off slow in the IPO market but picked up somewhat by the fourth quarter, with 136 deals for a total value of $27.3 bn. However, that’s still down 46 percent from 255 deals in the fourth quarter of last year. In terms of value, the final quarter of 2012 only dropped 6 percent compared to the same period last year.

The US market accounted for 29 IPOs in the fourth quarter for a total deal value of $7.3 bn, while Europe raised $7 bn in 20 IPOs, E&Y says. Asia led the globe in IPOs, with 59 IPOs, including state owned enterprises, in the quarter with a value of $8.8 bn.

By sector, technology led the IPO market in the full year of 2012, with 112 deals raising a total of $23.2 bn, followed by financials, which posted 46 deals for a combined $18 bn, the report says. Industrials, like technology, accounted for 112 deals but at a lower value – a combined total of $17.2 bn. The energy and materials sectors placed fourth and fifth, respectively, in IPO activity in 2012.

‘Looking ahead to 2013, we believe that the real estate sector is also set to be more active, due to increased investor interest ahead of a possible rebound in this sector,’ Pinelli says. ‘Oil and gas also looks set to become a more dynamic sector in the US and Europe. Other sectors to watch include infrastructure and healthcare, where investment is expected to occur.’

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