| March 28
March 28 Global equity fundraising rose 24
percent in the first quarter from a year ago, as strong markets
and easing concerns about the economy encouraged more companies
to raise capital through initial public offerings and other
capital market transactions.
Private equity-backed companies queued up to list shares as
U.S. stock markets reached record highs, helping boost U.S. IPO
volumes by 65 percent so far this quarter. Bankers expect more
investments from the 2006-2007 buyout boom years to crowd the
IPO market this year.
Investor confidence also returned after political and
economic uncertainties stymied capital raising in 2012, in
Europe in particular. While some risks remain, including
political uncertainty in Italy stemming from an inconclusive
election last month and wobbles over a bailout deal for Cyprus,
stock markets have been fairly resilient in the region.
Global equity fundraising, which includes IPOs and secondary
offerings, rose to $183 billion so far this quarter from $147
billion in the same period last year, according to Thomson
Reuters data as of March 27.
IPO volumes rose 37 percent to $21 billion, as the surge in
U.S. activity and a rebound in European volumes offset a 56
percent decline in Asia, the data shows.
"It's been a very active quarter as investors are rallying
behind an economic recovery," said Philip Drury, co-head of
equity capital markets for the Americas at Citi. "We think
you are going to see a meaningful increase in the number of
critical mass IPOs in the second and third quarter as market
conditions are very robust, and we are advising clients to
access the window of opportunity."
Private equity firms looking to sell portfolio companies are
driving much of this activity in the United States across
various sectors like industrials, retail and consumer, and
Large private equity-backed companies planning IPOs later
this year include eye care company Bausch & Lomb Inc, technology
products retailer CDW Corp, theme park operator Sea World Parks
and Entertainment and testing services company Quintiles
"Public market investors are more comfortable today with
leverage on IPOs because their outlook on the business
environment is more optimistic than it was in the past," said
Mary Ann Deignan, head of equity capital markets for the
Americas at Bank of America Merrill Lynch.
"That leads us to be able to go to financial sponsors and
give them new advice about companies that we told them a year
ago they couldn't take public."
U.S. technology IPOs, meanwhile, comprised a mere 8.8
percent of IPO activity, compared with 34 percent in the year
prior, as fervor for the sector tempered after Facebook Inc's
$16 billion public debut in May 2012 fell flat.
In the absence of deals that hit the market in 2012,
including Facebook and business software maker Workday Inc
, the majority of technology offerings this year are
likely to be smaller companies in sectors like business
software, advertising technology and data storage, bankers say.
"There are a ton of (technology) companies out there with
revenue of about $75 million to $125 million that are growing at
least 20 percent a year and are profitable," said Paul Deninger,
a senior managing director at Evercore Partners Inc.
"Those are the deals that are going to emerge this year."
In the first quarter of this year, Goldman Sachs Group Inc
topped the global ranking of equity underwriters with 86
deals accounting for proceeds of $23 billion, up from No. 2 in
the first quarter of 2012. Morgan Stanley followed as No.
2 and Citigroup as No. 3.
Goldman Sachs was also the leader for global IPOs, raising
$2.7 billion for clients, followed by Deutsche Bank and
PICK-UP IN EUROPE
In Europe, improving stock markets have encouraged a string
of companies to test the water for initial public offerings,
which began to show signs of a pick-up in the final quarter of
2012 after years of subdued activity due to the financial
Housebuilder Crest Nicholson Holdings PLC and
insurer esure Group PLC were among those going public
in London, which saw the bulk of activity, while German real
estate group LEG Immobilien AG completed Europe's
biggest listing of the quarter when it raised 1.3 billion euros
"We've now seen a number of companies successfully getting
IPOs done and other issuers ... could look to take advantage of
the momentum and revisit deals that they put on the back
burner," said Klaus Hessberger, co-head of EMEA ECM at JPMorgan
Chase & Co.
"Investors are interested in Europe again and we're seeing
U.S. money coming into European equities ... The crisis isn't
over, but the market and sentiment have come a long way compared
to where they were 12 months ago."
But bankers caution activity is still far from returning to
"There is a reasonable pipeline but deal making activity is
not at a high level. There are deals to come, but I think right
now people are still looking at the market with sobriety," said
Craig Coben, head of EMEA ECM at Bank of America Merrill Lynch.
In the second quarter, Dutch telecoms group KPN is
expected to complete a planned 3 billion euro rights issue,
while German chemical company Evonik plans to float in April.
Among others reported to be preparing to float in the coming
months are Germany's biggest real estate firm, Deutsche
Annington, which could yield as much as 1.5 billion euros, and
Cinven-owned British insurer Partnership Assurance.
ASIA SLOWLY EMERGES
Equity issuance in Asia ex-Japan rebounded as companies took
advantage of surging share prices to raise $46 billion in stock
and convertible bond offerings, 6 percent more than a year
The three largest equity deals in the world so far this
year were all in Asia, including the Japanese government's $7.7
billion stake sale in Japan Tobacco Inc, Minsheng
Banking Corp's $3.2 billion convertible bond and the
$3.1 billion sale of new shares by China Petroleum & Chemical
The $1.3 billion IPO of Mapletree Greater China Commercial
Trust underscored a trend expected to continue for the
remainder of the year, with yield-hungry investors looking to
boost returns with global interest rates seen low for the
"Interest rates remain very low so investors continue to
search for yield," said Jonathan Penkin, head of equity capital
markets for Asia ex-Japan at Goldman Sachs in Hong Kong. "High
quality assets with a yield element are all near or at the top
of their historical trading ranges."
Still, IPO activity sank 56 percent from last year to $3.3
billion, making it the slowest start of the year in the region
since 2009. Despite the downturn early into 2013, bankers expect
activity to pick up in coming months, with listings from motor
sport racing company Formula One and Alibaba Group, and
multibillion-dollar offerings from China Galaxy Securities,
Sinopec Engineering and several medium-sized Chinese banks.
"Alibaba will redefine the year," said an equity capital
markets banker at a global investment bank, who was not
authorized to speak publicly on the matter.