OREANDA-NEWS. December 21, 2007. Global initial public offering (IPO) activity reached record levels in 2007, with capital raised at an all-time high and the number of companies choosing to go public in the first 11 months of this year exceeding the whole of 2006, according to figures released by Ernst & Young.

From January through November 2007, US$255 billion was raised globally through 1739 IPOs – compared to US$246 billion raised in 1729 deals in the whole of 2006. The year-end spike in IPO activity seen in 2006 looks likely to be repeated in 2007 with preliminary data for the first two weeks of December indicating a further US$18 billion raised in 91 IPOs.

This record level of activity has been achieved despite the absence in 2007 of the mega-deals seen in recent years. The largest IPO of 2007 to date was Russia's VTB Bank, which raised US$8.0 billion, some way short of Chinese bank ICBC’s US$22 billion, the largest IPO of last year.

IPO activity continues to be driven by the emerging markets, which accounted for the majority of the largest deals of the year – 14 out of the top 20 IPOs, compared with nine of the top 20 in 2006. By industry, financial companies continue to dominate, representing one-quarter of all funds raised. Industrial and real estate also accounted for some of the biggest deals of 2006.

Brazil, Russia, India and China – the so-called BRIC countries – have raised US$106.5 billion in 382 deals so far this year, compared with US$89.6 billion raised in 302 deals in the same period of 2006. Of that group China generated more IPOs (209) than Russia, Brazil and India combined (173).

The capital raised by Russian/CIS companies worldwide increased from US$21.9 billion in 2006 to US$33.4 billion in 2007. The prospects to 2010 for the IPO market in Russia are very strong. There are more than 200 companies in the IPO pipeline for 2008–2010.

Worldwide, China, the US and Brazil were the market share leaders by capital raised with US$52.6 billion, US$38.7 billion and US$29.0 billion raised respectively. China also led the way in terms of the number of listings with 209, ahead of Australia and the US with 189 and 178 IPOs, respectively.

"The increased activity across the emerging markets stems from the growth of their economies and the ongoing globalization of the capital markets. This has seen the rise of new world-class financial centers, investors look further afield for investment opportunities, and the continuing trend of companies looking to list on domestic exchanges – almost all of the top 20 IPOs in 2007 went public in their home countries," Gil Forer, Global Director of IPO Initiatives at Ernst & Young, said. In 2007 the percentage of Russian and CIS companies listing solely on the LSE remained at 25%, with a significant number coming from Kazakhstan (14%). Russian companies preferred a dual listing (on LSE and local exchanges), and the share of dual listings in total IPOs rose from 16% in 2006 to 39% in 2007, including the listing of VTB Bank, the largest IPO in the world this year. The fraction of listings on Russian exchanges rose from 25% in 2006 to 29% in 2007, showing the further growth in the attractiveness of the Russian IPO market. Simultaneously, this year saw a drop in the fraction of companies registering on the Alternative Investment Market (AIM) from 22% last year to 3% in 2007. No Russian or CIS companies listed on the US exchanges this year.