The global IPO market saw a surge in activity in the last quarter of 2003 and early 2004, and is currently showing signs of a rebound, a new survey said.
Early indicators, The Ernst & Young Global IPO Survey said, point to the continued emergence of the global IPO market.
Over just the last two quarters, a total of 639 worldwide IPOs raised $53 billion compared to $23 billion raised in 332 deals during the first two quarters of 2003, it noted.
The SARS outbreak in Asia and uncertainty over the Iraq war hindered IPO activity in the first half of last year. However, stable economic conditions brought investors back into the market in the fourth quarter of 2003, igniting a flurry of activity. If the current deal flow maintains its momentum, 2004 activity could match the 1998 levels when $118 billion were raised from nearly 1,100 deals.
"The IPO market is open for business," said Joe Muscat, chairman of the IPO Transformation.
"There's an increase in economic confidence. Venture capitalists and private equity partners now have more visibility as to their exits, while bankers have another route to leverage to complete mergers or acquisitions."
Globally, Asia plowed full steam ahead in 2003 while IPO activity in the United States and Europe remained quiet compared to the 2002 levels. Asia accounted for 67 per cent of global IPO volume and 52 per cent of capital raised.
China was responsible for the lion's share of these transactions thanks to a solid economy that has been growing by nearly double-digits for a decade, the survey said.
The largest worldwide IPO in 2003 was China Life which raised $3.4 billion on the New York Stock Exchange. With half a dozen Chinese companies heading for floatations this year, 2004 could be another hot year for IPOs in Asia, the survey said.
"The IPO markets have become much more globalised," said Muscat.
"We're seeing an increasing trend of companies in economies growing faster than the US, such as China, seek a cross-border listing. Last year, several heavyweight cross-border issues raised over $500 million backed by international investors. There is investor appetite for these deals, however, foreign issuers face several challenges from a cultural, regulatory and behavioral standpoint," he added.
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