[2007-12-19]  JSE Claims Share of World Listings Boom
INITIAL public offerings (IPOs) on the JSE rose 30% in the fourth quarter of this year, underpinned by the buoyant construction sector, the accounting and auditing firm Ernst & Young said yesterday.

Gil Forer, global director of IPO i nitiatives , said SA saw 22 IPOs soaking up about $675m of capital in the fourth quarter, up from 17 IPOs in the third quarter.


"The country is experiencing a 'listings boom' with most of the activity being in the construction sector. Ten of the IPOs in the fourth quarter were construction or related companies," he said.

Forer said global IPO activity had reached record levels this year, as measured by both capital raised and the number of offerings. More companies went public in the first 11 months of this year than in all of last year.

From January to the end of November, $255bn was raised globally through 1739 IPOs -- compared to $246bn raised in 1729 deals last year.

"The year-end spike in IPO activity seen in 2006 looks likely to be repeated in 2007 with preliminary data for the first two weeks of December indicating a further US$18bn raised in 91 IPOs," he said.

This record had been achieved despite the absence of the mega-deals seen in recent years.

The largest IPO so far this year was Russia's VTB Bank, which raised $8bn, well short of the $22bn of China's Industrial and Commercial Bank, the largest IPO of last year.

IPO activity continued to be driven by the emerging markets, which accounted for the majority of the largest deals of the year -- 14 of the top 20 IPOs, compared with nine of the top 20 last year.

By industry, financial companies continued to dominate, representing a quarter of all funds raised. Industrial and real estate also accounted for some of the biggest deals last year.

Brazil, Russia, India and China raised $106,5bn in 382 deals so far this year, compared with $89,6bn raised in 302 deals last year.

China generated 209 IPOs compared with Russia, Brazil and India's 173 combined.

Worldwide, China, the US and Brazil were the leaders by capital raised with $52,6bn, $38,7bn and $29bn raised respectively.

China had the most listings -- 209 -- ahead of Australia and the US with 189 and 178 respectively.

"The increased activity across the emerging markets stems from the growth of their economies and the ongoing globalisation of the capital markets.

"This has seen the rise of new world-class financial centres, investors look further afield for investment opportunities, and the continuing trend of companies looking to list on domestic exchanges -- almost all of the top 20 IPOs in 2007 went public in their home countries," Forer said.

The Asia-Pacific region accounted for 46% of IPOs, ahead of Europe, the Middle East, and Africa (EMEA) with 35%, and North America with 14%. The EMEA countries and Asia-Pacific had the greatest share of capital raised with 38% and 32% respectively, eclipsing North America's 16% and Central and South America's 14%.

The total share of the leading exchanges was down this year from 51% to 45% by number of listings, and from 72% to 58% by total capital raised.

Despite having only 4% of the IPOs Hong Kong was the leading exchange by capital raised -- 13% -- mainly due to some of the year's largest listings, including CITIC Bank and China Railway.

The New York Stock Exchange was ranked second by capital raised with 11%, attracting 3,6% of total listings driven by a number of large US deals, including Blackstone Group and MF Global.

Although only 2% of IPOs were listed in London, that market attracted 10% of capital raised, mainly through a few large Russian deals, including VTB Bank and Pik Group.

"Despite market uncertainty, the pipeline of IPO-ready companies looking to list in 2008 looks healthy, especially across the emerging markets," Forer said.



Source: Copyright © 2007 Business Day.