Global IPO activity rose by 39% in Q2 2011

And guess who’s leading with 108 IPOs and US$20.4 billion funds raised?

It’s China, with 28.6% of the number of deals globally and 31.6% of funds raised globally, according to Ernst & Young’s Q2 2011 Global IPO Update.

According to a release, despite global macro-economic uncertainties in Q2, and several high profile IPOs in which performance has not met expectations, global IPO fundraising activity rose by 39% in Q2 compared with Q1 2011. In Q2 2011, 378 IPOs globally raised a total of US$64.6 billion,

China sustains lead
Despite IPO activity experiencing a slow down, Chinese companies led global IPO activity in Q2 2011 – in terms of both number of IPOs and funds raised.

In the first half of 2011, Hong Kong Exchanges and Clearing Ltd raised US$23.6 billion over 35 deals, the highest total funds raised in the first two quarters of a year across the past decade. In Q2 2011, 7 of the global top 20 IPOs are listed in Hong Kong, including Glencore, Prada SpA, Shanghai Pharmaceutical, MGM China, Hui Xian REIT, Samsonite and Huaneng New Energy.

The Shenzhen Stock Exchange (SZSE), including the SME board and the ChiNext board, recorded 144 deals in the first half of 2011, making it the top stock exchange globally by number of deals.

Dilys Chau, Assurance Partner, Ernst & Young says: “Both number of deals and funds raised in the A Share market (including both the SSE and SZSE) in the first half of 2011 are less than the corresponding period last year. Chinese IPO activity has slowed down, with investors concerned by commodity and housing prices inflation. However, the Chinese IPO pipeline is still very strong, containing large state-owned enterprises and mid-cap companies.”

IPO activity on the Taiwan Stock Exchange (TWSE) was stable in the first half of 2011 with 13 deals.

Future outlook
Jacky Lai, Assurance Partner, Ernst & Young says: “Despite the continued uncertainty of a global economic recovery, IPOs remain at the heart of many companies’ growth strategies. As the global IPO pipeline continues to build, we expect a strong second half for new offerings from high profile issuers. We also predict a strong second half for IPO activity in China, and that China will continue to lead global IPO activity in 2011.”

Jimmie Cheng, Assurance Partner, Ernst & Young says: “There is a strong pipeline of companies considering IPOs on the HKEx. Whether the HKEx can regain its top position in terms of IPO fund raising globally in 2011 will depend on the capital market condition, and whether the biggest social network company in the US will happen in the second half of 2011.

HKEx has evolved as a leading exchange for cross-border IPO activity. In second half of 2011, Chinese mainland companies will still be the major players in terms of IPO activity in Hong Kong. There are also likely to be more cross-border IPOs of overseas companies.”

Chau adds: “Speculation surrounding the launch of the Shanghai International Board is a hot topic in the market at the moment. The launch is at its final stage, with basic principles set and a few high profile companies are already preparing to list on the Shanghai International Board.

In order to list on the Shanghai International Board, companies will need to appoint professional organizations, including Chinese CPAs with securities license. It is likely that the Shanghai International Board will create more business opportunities for Hong Kong accountants as a reciprocal arrangement for H Share companies.”