Sunday, 12 April 2009

Only 50 IPOs worldwide in Q1 2009

I hardly need to "work" on this blog. There are hardly any work to be done. With only 50 IPOs globally in Q1 of 2009, the statistics speaks for itself.

The IPO market is an interesting one. Good profitable companies with strong cashflow will not want to list during such a period where valuations are extremely low since they are not in urgent need of cash and the owners are unwilling to "sell" their companies are lousy prices. Poor and loss-making companies in urgent need of capital for expansion will find it tough to list under such market conditions as no underwriters will be willing to help them list the companies. As a result, hardly any companies list during this period.

Here is a recent article that appeared on Channel News Asia.

SINGAPORE: Global activity for initial public offerings (IPO) is continuing to slow, with just 50 IPOs worldwide in the first quarter of this year. According to Ernst and Young, these 50 IPOs raised only US$1.4 billion in capital for the period between January 1 and March 31. In the last quarter of 2008, about 80 companies were listed worldwide, raising about US$2.6 billion. Ernst & Young said only two deals raised over US$100 million.

The top three global IPOs by capital raised were US consumer staples company Mead Johnson Nutrition, Chinese firm Real Gold Mining and Saudi company, Etihad Atheeb Telecommunications Company. These three accounted for 75 per cent of capital raised during the first quarter of this year.

Ernst and Young said IPO activity has fallen sharply year-on-year. It added that the deal threshold required to make the top 20 IPO list has also dropped significantly over the past year.
In the first quarter of last year, companies would have to raise at least around US$127 million to make it to the top 20 list, but all they needed in the first quarter this year was around US$6.8 million. Ernst and Young expects the IPO markets to take a much longer time than what most people have predicted to recover.

Ernst & Young Assurance Partner and IPO leader in Singapore, Max Loh, said: "The timeframe for recovery of the IPO markets looks to be much longer than people initially thought a year ago. I feel it will require at least two to three quarters of macroeconomic stability and for confidence to be re-built. "There are, however, many quality companies from both developed and emerging markets which have delayed or deferred their public listings. These companies continue to ready themselves to go public while waiting for market conditions to stabilise. So when the markets open and valuations improve, these companies will be poised to take advantage."

2 comments:

Loh Hon Chun said...

Another interesting fact.

Big Drop in 1Q M&A Deals for VC-Backed Companies, IPO Drought Continues
http://www.xconomy.com/national/2009/04/01/big-drop-in-1q-ma-deals-for-vc-backed-companies-ipo-drought-continues/

hongjun

2Y Capital said...

wow....such fast response...! :P

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