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Private equity backed companies mopped up $17.2 billion through initial public offers (IPOs) globally during April-June 2011, with firms in Indian and China together accounting for $2.7 billion of the total capital raised.
According to a report by Ernst & Young, 45 PE-backed companies raised $17.2 billion in proceeds, the highest quarterly total since the second quarter of 2007.
This figure is nearly twice the volume of January-March period and up 24 per cent on a value basis.
So far this year, PE-backed firms raked in $31.1 billion in 68 separate IPOs, the report said, adding that it will exceed the $58.3-billion mark which was raised at the market-peak in 2007.
“Despite ongoing uncertainties in the markets, momentum is clearly continuing to build across the IPO markets. This is giving PE sponsors an ever-widening window to exit holdings as investors move further out of the risk spectrum in search of companies with strong growth stories,” the Ernst & Young Global Private Equity Leader, Mr Jeffrey Bunder, said.
Companies based in China and India garnered $2.7 billion across nine deals in the second quarter compared with the $1.5 billion raised in six deals in the previous quarter.
Further, companies based in the emerging markets also continued to see elevated activity as they raised $7.7 billion across 17 separate deals.
“Emerging markets exchanges are becoming increasingly amenable to sponsored IPOs as investors become more comfortable with the PE model. Additionally, the growing availability of cross-border listings is providing emerging markets-based companies with a wider range of opportunities than in past cycles, ” Mr Bunder added.
In Asia, the IPO activity on Asian exchanges grew from six deals valued at $1.3 billion in the first quarter to 12 deals valued at $3.2 billion in the second quarter.
Despite the increase, issuance however came under pressure midway through the quarter as investors dealt with growing concerns about the effects of looming inflationary pressures on the region’s economy, leading many companies in Asia-Pacific to postpone or cancel their offerings. China in particular saw 28 deals postponed or withdrawn in Q2.
“While market sentiment could slow the pace of new issuance out of China, the overall pipeline remains healthy,” the report noted.
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