| LONDON, June 30
LONDON, June 30 Companies around the world have
raised almost half a trillion dollars by selling shares in 2014
so far - the highest total for the first half of a year since
2007, before the onset of the financial crisis, data showed on
Firms have flocked to issue equity thanks to record highs in
stock markets and low volatility, while private equity firms
have seized the opportunity to sell out of investments made
before the crisis, capitalising on strong investor demand.
The surge in activity reflects investors' hunger for yield
in a world of rock-bottom interest rates, a confidence in stock
markets, and a focus away from emerging regions towards the
developed markets that play host to many large companies
Total global activity in so-called equity capital markets
(ECM) has hit $449.1 billion in the year to date, up 16 percent
from the same period in 2013, Thomson Reuters data showed.
And it has been accelerating - $254 billion was raised in
the second quarter, a third up on the first three months.
The market for initial public offerings (IPOs) has boomed,
with the amount raised by companies worldwide soaring 60 percent
to $107.2 billion in the first half, compared with a year ago.
Investors have focused on Europe, rushing to cash in on the
region's nascent recovery and cheap money released by central
banks, despite the turmoil in Ukraine which has delayed several
listings by Russian firms.
The cash raised in European IPOs rose almost 250 percent to
$41.2 billion. But there have been recent signs of cooling as,
spoilt for choice, investors are getting more selective and
turning away from businesses with the most questionable
"I personally think that in many ways the (IPO) market is at
its healthiest at the moment," said Richard Cormack, co-head of
ECM for Europe, Middle East and Africa at Goldman Sachs.
"At the start of the year the market was pretty euphoric.
You then had a correction in April started by the sell-off in
high-growth stocks in the U.S., which impacted IPO sentiment."
WIZZ AND WOBBLES
The financial sector has led the way for ECM activity with a
fifth share of the market, driven by a slew of bank capital
raises, including Deutsche Bank's 6.8 billion-euro
rights issue, and sector stock market listings in the euro zone.
The listing of ING's insurance arm NN Group is set
to be Europe's biggest of the year so far in terms of the firm's
market capitalisation, with an expected value of roughly 8
billion euros following its debut.
But it hasn't all been plain sailing. NN Group's July
flotation will come after a difficult few weeks for listings,
with some struggling to attract investor interest in the
bookbuilding process and trading down after their flotations.
UK holidays-to-insurance company Saga has fallen
almost 7 percent below its issue price, while sister firm AA
also fell the same amount in its first day of trading.
"The after-market performance of some IPOs has been sub-par
and so given the number of deals in the market, investors are
likely able to be selective," said Ed Sankey, global head of
syndicate at Deutsche Bank. "They are polarising around certain
transactions whilst steering clear of others."
The wobbles have led some firms to rethink their listings,
with UK student firm Liberty Living, retail chain Fat Face and
Hungarian airline Wizz Air all yanking flotation plans.
"Most companies will be waiting until the autumn now, and
will be hoping market conditions remain supportive and perhaps a
little less congested," said Tom Johnson, co-head of ECM Europe,
Middle East and Africa at Barclays.
Goldman Sachs ranked first globally for ECM deals by volume,
with 221 deals totalling $43.3 billion, followed by BofA Merrill
Lynch and JP Morgan.
It has proved a lucrative business for banks, with
underwriting and advisory fees rising by a third to $10.9
billion worldwide. Goldman scooped the highest ECM fees, earning
almost $826 million.
American IPOs rose a quarter on the same period in 2013, but
with Europe stealing the show the U.S. market share fell to its
lowest since 2011 - 25 percent, from 31 percent a year ago.
That could all change with Alibaba's monster float
, after the China e-commerce juggernaut last week
picked the New York Stock Exchange for its IPO, a coup for the
bourse against fierce rival NASDAQ.
Despite Alibaba's decision to go abroad, Asian activity has
almost doubled since the same period last year, helped by China
reopening its markets following last year's ban. The world's
No.2 economy is loosening its grip on listings as it shifts from
an approval-based system towards a U.S. model.
This month the approval of four mainland Chinese IPOs drew
($1 = 0.7359 Euros)
(Editing by Pravin Char)