Hong Kong Stock Exchange Leads In Record Year For Global IPO Activity

by Mary Swire, Tax-News.com, Hong Kong

03 January 2007

Global IPO activity soared to a record high in 2006, with the largest single share of IPO funds raised on the Hong Kong Stock Exchange (HKSE), according to a report released by Ernst and Young.

The report, based on data provided by E&Y, Dealogic and Thomson Financial, shows that from January through November 2006 US$227 billion was raised in 1,559 IPOs - a significant increase on the US$167 billion raised in the whole of 2005.

The report found that as in 2005, the increase in capital raised was led by large deals, and 2006 saw the biggest IPO ever with the listing of ICBC in China, raising almost US$22 billion alone. In second and third place came the IPOs for Bank of China Ltd and Rosneft with each raising more than US$10 billion, beating last year's most significant IPO for China Construction Bank. Four out of the top 10, and six out of the top 20, deals were from emerging markets. All top 20 deals raised more than US$1.3 billion each.

"The capital markets continued to globalize in 2006," said Gregory K. Ericksen, Ernst & Young's Global Vice Chair Strategic Growth Markets. "We've seen an increase in cross-border listings and stronger competition between exchanges, creating more options than ever for both investors and companies looking to go public."

According to the report, HKSE came out number one with 17% of the total capital raised worldwide. In second place with 15% was LSE, as London emerged as a hub for foreign transactions on both the main board and the Alternative Investment Market (AIM). NYSE was in third place with 11% of the total capital raised.

The top two Chinese deals meant that Asia/Pacific moved into overall second place with 34% of the total capital raised. Europe, Middle East and Africa (EMEA) accounted for 42%, while North America and Central/South America (including the Caribbean) respectively raised 20% and 4%.

The report noted that in 2006 technology, materials, financial services, and consumer products and services produced the highest number of deals, and energy and power as well as financial services dominated the top 20 IPOs by capital raised.

"2006 was definitely the year for emerging markets. We expect they will continue to lead the way in 2007. The investment and business opportunities this will create will have a ripple effect throughout the world," concluded Greg Ericksen.

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