| Sept 27
Sept 27 Bankers say an uptick in IPO activity
towards the end of the quarter, helped by a strong run in stock
markets, signals capital raisings may be set for a rebound the
rest of the year.
The upptick would follow a 53 percent rise in global equity
fundraising in the third quarter, boosted by large secondary
sales in companies such as American International Group Inc
, as new issuance suffered from widespread economic
"Most of this quarter it was game off and you wouldn't have
dared thinking about launching an IPO unless it was really
fundamentally cheap," said Adam Welham, head of European
equities syndicate at Barclays.
"We are now in a very different stage where the possibility
of deals coming to market is that much higher."
Global equity fundraising volumes, including IPOs and
secondary offerings, totalled $162 billion in the third quarter,
up from $105 billion in the same period last year, according to
preliminary Thomson Reuters data as of Sept. 27.
The increase came despite a 24 percent decline in global IPO
proceeds. A total of 147 companies worldwide went public in the
third quarter, raising $21.8 billion, compared to a year ago
when 208 companies raised $28.8 billion through IPOs.
Lingering concerns about the global economy have led more
investors to seek relative safety in follow-ons, rather than
taking risk with offerings from unproven companies that are
newly going public, bankers said.
"There has been a lot more follow on activity as investors
want exposure to names that already offer decent liquidity,"
said David Hermer, head of equity capital markets for the
Americas at Credit Suisse.
A landmark $18 billion secondary offering for AIG by the
U.S. Treasury Department, and Banco Santander SA's $4
billion offering in the U.S. and Latin America boosted deal
FACEBOOK SHOCK SUBSIDES
Technology IPOs, which took a hit from Facebook Inc's
troubled stock market debut in May, began to recover in the
third quarter, comprising nearly 60 percent of all deals during
The quarter saw successful market debuts from several tech
companies including security firm Palo Alto Networks Inc
, travel software company Kayak Software Corp
and online real estate listings provider Trulia Inc.
Next in line is software company Workday, which filed for a
$400 million offering earlier this month.
"Market participants had thought IPOs for the technology
sector were broken, but technology IPOs seem to be working
again," said Michael Goldberg, head of U.S. equity capital
markets at RBC Capital Markets.
"In these growth tech companies there are still investors
for the right growth stories and at the right price points."
Goldman Sachs Group Inc has topped the global ranking
of equity underwriting so far this year, retaining the top spot
it held last year.
Citigroup Inc came in second, up from its No. 7
position, while Morgan Stanley ranked third, down from
its No. 2 position last year.
Morgan Stanley, the lead underwriter on Facebook's IPO, led
the IPO league table so far this year, followed by Deutsche Bank
CAUTIOUS OPTIMISM IN US, EUROPE
Large sponsor-backed IPOs have largely been absent from the
market since the first quarter of this year, as private equity
owners held off on exiting their investments in the face of
continuing market volatility.
With U.S. stock markets stabilizing in recent months, some
companies may go public in the next quarter. Among private
equity-backed IPO candidates being closely watched are Berry
Plastics Group Inc and Realogy Corp, owned by
private equity firm Apollo Global Management LLC.
The November presidential election may also create a smaller
window for deals as companies scramble to launch their offerings
"Fourth quarter windows will open and close quickly given
seasonal holidays and incremental global geopolitical event
risk," said Phil Drury, co-head of equity capital markets in the
Americas at Citigroup.
In Europe, markets remained relatively fragile but bankers
said they saw increased investor interest for new issuance as
Russia's Sberbank was the biggest European share
sale of the quarter. Russia's Central Bank drew strong demand
for its sale of a 7.6 percent stake in Europe's third biggest
lender, which raised $5 billion.
The quarter also saw a string of bloc sales as companies
took advantages of market upticks to offload stakes. These
included Ziggo NV, one of the few large completed European new
listings this year, whose owners sold a further 682 million
euros of stock in late July.
Russia's second largest mobile phone operator, MegaFon
is among the biggest deals slated for the fourth
quarter, having earlier this month asked its local regulator for
permission to list its shares in London.
Spain's Telefonica SA also plans to list its German
unit O2 in the coming months.
"If you have got a story that is sufficiently attractive
then you have got a market now with which you can engage
constructively," said Darrell Uden, co-head of EMEA equity
caital markets at UBS.
The market is still far from booming. Many other companies
have been unable to bridge the gap in valuation between what the
sellers had hoped to achieve and what investors were willing to
German defense group Rheinmetall AG scrapped plans
for an IPO of its car parts division KSPG. Siemens AG
decided against floating its lighting unit Osram, saying it
would spin it off instead.
ASIA GLOOM CONTINUES
Asia-Pacific stock offerings continued a gloomy path,
posting a 57 percent slump in new issuance in the third quarter
from a year earlier according to Thomson Reuters data,
underscoring concerns about slower growth in China.
The IPO drought prompted bankers to focus on block deals,
which had an 84 percent jump in volumes in the first nine months
of 2012 from a year earlier.
Overall equity issuance in the region dropped 29 percent so
far this year to $116 billion, the lowest level since 2009.
Hong Kong, the world's IPO capital for two years running
through 2010, had no new listings since pachinko parlor operator
Dynam Japan Holdings priced a $200 million deal in
Bankers said the market could recover after China concludes
its once in a decade leadership transition in October, and if
measures to bolster the U.S. economy take effect.
"Two months ago, investors were not looking at IPOs out of
Greater China in general. Now the sentiment has somewhat
improved and they're willing to look at it on a case by case
basis, but by no means are they rushing into the IPO market
yet," said Kester Ng, chairman of equity capital markets for
Asia at JPMorgan in Hong Kong.
"More important to the Hong Kong IPO market is how China is