The global IPO market forged ahead in the second quarter of 2011, making it the second most active quarter of global issuance since 2007. Global IPOs in North American and Europe in particular showed surprising perseverance in the face of broader market volatility, with combined deal flow surging more than 60% year-over-year. Though volume trends showed continued strength, global performance was anemic as macroeconomic concerns stemming from the debt crisis in Greece, tsunami in Japan and rising inflation in China roiled stock markets, diminishing investor risk appetite. As these fears subside, we expect substantial improvements in both issuance and performance during the second half of the year.
A total of 124 global companies went public in the 2Q 2011, an 11% increase from the 112 IPOs completed in the prior
year period. Although the increase in issuance was moderate, proceeds jumped 46% to $56 billion, bolstered by Swiss
commodity trader Glencore's (GLEN.LN) $10 billion London/Hong Kong dual listing, which stands as the largest global
IPO year-to-date. Excluding China A Share offerings, which are not accessible to investors outside of China, 91 global
IPOs raised $49 billion, representing a 69% increase in deals and an 88% increase in proceeds year-over-year.
Though global IPO volume continued to show strength, renewed macroeconomic fears weighed on performance. More
than half of the 124 global deals were trading below their respective offer prices by quarter end, with a total average return
of 1%.
In the US IPO market, both deal flow and proceeds rose sharply from the year-ago period. There were 46 IPOs in the
2Q11, a 24% increase year-over-year. These 46 deals raised $12 billion in proceeds, a 151% jump year-over-year. On a
sequential basis, the number of issues also increased but proceeds fell, indicating a drop in average deal size ($268
million vs. $418 million in the 1Q11). Though private equity-backed companies remained active with ten IPOs, in line with
first quarter levels, smaller individual PE transactions contributed to this trend. For example, Yandex, backed by Russian
private equity firm Baring Vostok, was the quarter's largest US IPO but raised only $1.3 billion, roughly a third the size of
HCA's $3.8 billion IPO in the 1Q11.
US performance pulled back in the second quarter with the average US IPO climbing 8%, a moderate decrease from the
13% returned in the 1Q11 and a significant drop from the 22% average return in the year-ago period. By the end of the
quarter, 43% of US IPOs were trading below their listing prices.
Though the macroeconomic picture will likely remain clouded as China grapples with inflation and Greece's austerity
policies are put to the test, we believe investors' underlying enthusiasm for fresh product will drive both issuance and
performance during the second half. With high-profile names such as Zynga, Groupon and
LivingSocial, old-line companies including Dunkin' Brands and Toys "R" Us and global leaders such as Bankia, New
China Life and Repsol Brasil all preparing to go public, the global IPO market is on track to see a resurgence in activity in
the coming months.
Please contact us to obtain our full 2Q 2011 Global IPO Review or find out more about our
