LONDON (Reuters) - Global listings activity has been the highest on record so far this year, with firms raising a total of $24 billion to date, according to Thomson Reuters data, boosted by buoyant stock markets and improved investor interest.
It follows a record quarterly volume of initial public offerings (IPOs) in the final three months of 2010, which saw $122.2 billion raised globally, lifted by the mega floats of Asian insurer AIA Group (1299.HK) and U.S. automaker General Motors (GM.N).
Fundraising activity has been buoyed by relatively strong stock markets, with world equities, measured by the MSCI All-Country World Index .MIWD00000PUS, hitting 2-1/2 year highs this month despite unrest in the North Africa region.
“Investor appetite for IPOs is effectively leveraged to equity market tone, and we finished 2010 with an exceptionally strong four month window from September to December that continued into early 2011,” said Chris Whitman, global co-head of equity capital markets at Deutsche Bank.
“A larger universe of willing buyers then entices a larger universe of aspiring sellers.”
Last year pockets of market volatility linked to euro zone sovereign debt worries created windows in which the IPO market, particularly in Europe, effectively closed, with billions of dollars worth of planned listings pulled.
“It’s a sign of confidence that businesses which have been holding off in the past, as conditions weren’t right, feel there’s enough demand at the moment to get their floats away,” said Henk Potts, equity strategist at Barclays Wealth.
“Valuations remain attractive and investors believe the equity market is a promising place to invest and therefore demand for those riskier equities has been increasing, and of course that very quickly filters through into a flourishing IPO market.”
Although there are still some difficulties in the macro environment, investors are viewing the corporate environment more positively, Potts added.
The $24.3 billion raised globally since the start of January is a 20 percent increase on the same period last year, the data showed. Secondary offerings have also seen a boost, up 23 percent year-on-year to raise $67.7 billion globally.
Asia, which dominated equity capital markets in 2010, has continued to lead the field so far this year, with China accounting for 41 percent of issuance, including wind turbine maker Sinovel Wind’s (601558.SS) $1.4 billion listing last month.
Boosted by strong energy and commodity prices, energy and power has been the most active sector, making up 30 percent of fundraising, followed by industrials on 16 percent.
U.S. pipeline company Kinder Morgan (KMI.N) raised around $2.86 billion earlier this month in the largest U.S. energy-related IPO since 1998, upping the size and price of its offering after strong demand.
With several big listings -- including a $3.7 billion offering from U.S. hospital operator HCA Holdings and a $2.4 billion IPO by Denmark’s ISS -- currently in the works, and a huge pipeline of deals still to launch, the market shows no signs of slowing.
In particular, Europe is braced for a flurry of stock market listings in the next two months as firms use annual results as launching pads for share sales and hope to complete deals before investors disappear for the Easter break.
“If equity markets continue to be stable-to-higher, IPO activity is poised to continue to intensify,” said Whitman.
“There is a good chance that IPO volumes for 2011 will be markedly higher than 2010.”
Editing by Hans Peters