Breaking finance and business news, tax information, jobs and more for finance directors and senior finance professionals.

The figures, according to the latest Ernst & Young quarterly Global IPO Report, show that the BRIC countries (Brazil, Russia, India and China) together raised US$27 billion in 118 IPOs, an all time high. Emerging markets IPOs also accounted for seven of the 10 largest floats during the third quarter.

Despite this rosy picture, global IPO activity showed a sharp decrease of 22 per cent from 552 IPOs in the second quarter of 2007 to 428 in the third quarter – although up 27 per cent on quarter three in 2006. The amount of capital that was raised during the third quarter also fell by 36 per cent from US$89bn compared to US$57bn in the second quarter of this year.

Gil Forer, Global Director of IPO Initiatives at Ernst & Young, says, “The Global IPO markets still remain strong despite a drop in activity. The record numbers of IPOs in the emerging markets show that it is these countries that are driving global economic growth – international investors continue to look for high return opportunities. Thirteen of the top 20 IPOs were from emerging markets and interestingly only two of those chose not to list on domestic exchanges.”

There was a substantial drop in companies listing on the London Stock Exchange and AIM market in the UK in quarter three of 2007, with only US$4.5 billion raised in 47 deals, compared to 62 raising US$18.5 billion in quarter two of 2007 – a 75 per cent decline in value.

Gloomy 

David Wilkinson, UK IPO Leader at Ernst & Young, said that the lower number of companies listing in the UK has been caused by uncertainty in capital markets following the US sub-prime issue. However, he warns that the picture is slightly distorted by the fact that two of the mega deals that occurred in the second quarter – VTB Bank, a Russian company that raised nearly US$8 billion and Russian’s Pik Group almost US$2 billion - contributed to over half of the proceeds raised in the period.

“The outlook for London in the fourth quarter of this year is looking gloomy, with a number of companies having already postponed their plans to float in recent weeks. If uncertainties continue around the credit crunch and access to capital remains difficult we are unlikely to see a marked shift in deal activity in the UK until the first half of 2008.”

Overall, China, Brazil and the US led activity by capital raised, and made up 56 per cent of the global total with US$14.4 billion, US$9.3 billion and US$8.3 billion respectively. China also led number of IPOs with 77, surpassing last quarter’s leader Australia (50) and the US (36).

Financial services maintained its position as the dominant sector by the total amount of capital raised globally, followed by energy and power (14 per cent), industrials (14 per cent) and materials (12 per cent), with the latter leading the way by volume of listings with a 20 per cent market share of international IPO activity, compared to 16 per cent for industrials and 14 per cent for high technology.

Related links

• Ernst & Young