IPO activity shows uplift but outlook remains uncertain

Q2 sees US$9.9bn in capital raised compared with US$1.4bn prior quarter,
buoyed by Brazil's largest ever IPO

LONDON, July 7 /PRNewswire/ -- Global IPO activity increased in Q2 with 76
IPOs worldwide compared with 52 the prior quarter, according to Ernst &
Young's second quarter Global IPO update. Deal value increased seven-fold to
US$9.9 billion from just US$1.4 billion. However activity remains sharply down
on 2008 levels when the second quarter saw 269 IPOs raise US$38.2 billion in
capital.

This quarter's figures were bolstered by Brazil's VisaNet deal (US$3.7
billion), which is the largest IPO worldwide so far this year and Brazil's
biggest ever; metals company China Zhongwang Holdings Ltd (US$1.3 billion);
and Vodafone Qatar (US$0.95 billion). Together these deals accounted for 60%
capital raised worldwide. Reflecting these IPOs, Brazil and China accounted
for two-thirds of global capital raised for Q2.

As in Q1, the most active country this quarter was South Korea with 17 IPOs (8
IPOs, Q1). China and Canada followed, with 13 and 9 IPOs respectively. China's
nine month ban on IPOs at the Shenzhen exchange came to end this quarter with
an offering by Guilin Sanjin Pharmaceutical. The United States also saw an
uptick in activity rising from 1 IPO in Q1 to 8 in Q2, of which 6 made the top
20 globally[1]. Emerging markets accounted for 53 of the 76 global IPOs.

The threshold values for the top ten global IPOs has improved dramatically
this quarter up from US$12.0 million to US$171.3 million, but still radically
down year on year (US$848.6 million).

Gil Forer, Global Director of IPO initiatives at Ernst & Young, comments: "We
have seen an increase in activity in the second quarter but capital raised is
at a fraction of the prior year. Early signs are that the wider economy has
bottomed out but recovery is likely to take time and will vary by region. The
IPO market generally trends the macro-economy albeit with a time lag.
Historically, markets have taken at least four to six quarters to recover from
an economic downturn."

Forer adds, "However highly successful IPOs tend to emerge from post recession
periods. These companies, having survived the ultimate stress test, are often
leaner and have demonstrated the resilience of their business model. It's a
good time for dynamic entrepreneurial companies. And the high performance of
stock exchanges around the globe in the second quarter has resulted in renewed
interest in companies around the world to go public."

The leading sectors by number of deals were Industrials[2] (16); Materials[3]
(14); Financials (10) and High Technology (10). Due to the low value of funds
raised, the top three sectors by capital raised mirror the top three IPOs.
Financials (US$3.8 billion), Materials (US$1.8 billion), and
telecommunications (US$1.2 billion) accounted for 70% of total capital raised.

For the year to 30 June 2009, the top three exchanges by number of IPOs are
South Korea's KOSDAQ (24); Hong Kong Stock Exchange (14) and New York Stock
Exchange (7). By funds raised, the top three exchanges over the same period
are the BOVESPA in Brazil with the one IPO (VisaNet at US$3.7 billion); Hong
Kong Stock Exchange (US$2.5 billion) and the New York Stock Exchange (US$1.7
billion).

Follow-on offerings
The completion of follow-on offerings in established public companies is
sometimes regarded as an indicator of IPO market revival. Between Q1 and Q2
there has been more than a 100% increase in the number of deals (up from 612
to 1,361) and capital raised (US$101.1 billion to US$284.2 billion). However,
in terms of value, this has mainly been driven by financial institutions
seeking to recapitalize and repair balance sheets.

In addition to follow-on offerings, Ernst & Young's Global IPO trends report
2009 notes that market analysts commonly cite the following indicators of an
IPO market revival: positive fund flows into the equity market, investor
appetite, brighter corporate earnings outlook, recovery in market valuations,
evidence of liquidity to spur business and consumer spending, successful
public-equity transactions involving carve-outs/spin-outs from existing large
public companies and new VC/PE-backed IPOs.

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[1] DigitalGlobe Inc; SolarWinds Inc; Bridgepoint Education Inc; Rosetta Stone
Inc, LogMeIn Inc and MediData Solutions Inc

[2] 'Industrials' includes automobiles and components; building/construction
and engineering; construction materials; machinery and other industrials;
transportation and infrastructure.

[3] Materials' includes chemicals; construction materials; containers and
packaging; metals, mining and other materials; paper and forest products.

SOURCE Ernst & Young LLP

Katie Johnston of Ernst & Young LLP, +1-201-872-7194, katie.johnston@ey.com