While the U.S. is still a dominant player in the IPO markets, it's no longer the kingpin that it once was. The Asia-Pacific region has emerged as the most active IPO market in terms of both total proceeds and number of deals. Led by China, that region also includes Hong Kong, Singapore, South Korea and Malaysia. (To learn more about IPOs, read How An IPO Is Valued.)
TUTORIAL: IPO Basics
Data provided by Renaissance Capital through August 26, 2011 indicates that Asia-Pacific had 55% of worldwide deals and 44% of proceeds. This bested the North America region which had 25% of both deals and proceeds.
The decline of U.S. dominance started after the implosion of the dot-com bubble in 2000. Many Internet companies were brought to market with no sustainable revenues, profits or business models. When most of those companies went bust, the market for IPOs and venture capital dried up. However, it appears to be making a comeback
Below are the top 10 IPO markets based on the number of closed deals (year-to-date):
- China - 103
- United States - 64
- Hong Kong - 21
- Brazil - 11
- United Kingdom - 11
- Germany - 7
- South Korea - 7
- Poland - 4
- Singapore - 4
- Canada - 3
Below are the top 10 IPO markets based on total volume – USD/billion (year-to-date):
- United States - $27.3
- China - $23.1
- United Kingdom - $16.1
- Hong Kong - $14.3
- Singapore - $6.9
- Spain - $5.2
- Brazil - $4.0
- Poland - $2.3
- South Korea - $2.0
- Germany - $1.8
Biggest IPO Companies
Dealogic compiled a list of the biggest IPOs in the world for the first half of 2011, ranked by total dollars raised. Here are the top five.
Glencore International - $10 Billion
This Swiss-based commodity trader was founded by Marc Rich in 1974. He fled the U.S. after being charged with tax evasion, later receiving a pardon from President Clinton. He sold the company in 1993 for about $600 million. Shares were listed on the London and Hong Kong stock exchanges. Glencore was the largest IPO to debut in the history of the Hong Kong exchange
Hutchison Port Holdings – $5.45 Billion
This conglomerate has business interests in oil, power, retail and telecommunications. The Port Holdings Trust holds the company's port assets in Macau, Hong Kong and Shenzhen. The company has benefited from the upturn in container traffic at the world's most active port region following the 2008 economic meltdown. Because of its business trust structure already established in Singapore, the shares were listed there and represented the largest listing in Singapore's history.
HCA Holdings – $4.35 Billion
This U.S. hospital operator was taken private in a 2006 leveraged buyout involving private equity firms, Citigroup, Bank of America and the company's founder. In spite of the large amount of debt used to close that deal, the U.S. listed shares attracted attention because of the lure of higher returns in a low interest rate environment. The company faces risks because of the government overhaul of the healthcare system and its reliance on medical insurers that depend on government funding. For some investors, the 2010 average debt of $27 billion is overshadowed by the company's profitability and stable cash flows.
Kinder Morgan – $3.29 Billion
This number two U.S. energy pipeline company was taken private in 2007 in a leveraged buyout involving the Carlyle Group, Goldman Sachs and Riverstone Holdings. It went public again as the largest energy-related public offering since 1998, when DuPont spun off Conoco. Over the past decade, investors have realized a 16% average annualized total return.
Nielsen Holdings – $1.89 Billion
This well-known television ratings company was taken private in 2006 in a leveraged buyout involving KKR, Carlyle Group, Blackstone Group, Hellman & Friedman, AlpInvest Partners and Thomas H. Lee Partners. In addition to its TV ratings used to establish advertising rates, it also measures consumer behavior for the retail goods industry. It operates in about 100 countries and tracks audiences across the communications spectrum, including the Internet, mobile phones, radio and television. Nielsen has reported consecutive net annual losses since the buyout.
The Bottom Line
With global IPOs valued at $111 billion for the first half of 2011, this year is lagging behind the total of $285 billion raised in 2010. There is some correlation between IPO activity and GDP as the U.S. and China are the world's two largest economies. However, the emerging markets had six of the top 10 IPOs during the second quarter of 2011. As a percentage of GDP, the real growth in IPOs has been in Hong Kong, Singapore, South Korea and Brazil.
The combination of a maturing economy and limited growth will likely keep the filing of new U.S. public offerings at roughly the current pace for the near future. One IPO generating interest is telecom equipment maker Avaya, previously taken private by TPG Capital and Silver Lake Partners. A 2000 spinoff of Lucent Technologies, the company is targeting a $1 billion offering on the NYSE. Also attracting interest is online coupon seller Groupon whose IPO is expected this fall. (Before you jump into the IPO market, check out The Murky Waters Of The IPO Market.)