Emerging markets drive global IPO volume

Despite the sub-prime crisis spreading its wings to the Indian stock market, the country along with its emerging market peers China, Brazil and Russia defied a sharp plunge in the worldwide IPO market in the third quarter of 2007, a study said on Wednesday.

The number of global initial public offerings dropped by 22 per cent in the July-September quarter compared with the previous quarter, according to the quarterly Global IPO Report from international consultancy firm Ernst and Young.

While mature markets experienced a slowdown, emerging markets continued to thrive with record activity and accounted for nearly half of the total IPO proceeds in the quarter, the report said.

Globally, $57 billion were raised in 428 IPOs in the third quarter, and the amount of capital raised fell by 36 per cent compared with the previous quarter. However, the number of IPOs rose by 25 per cent and the value was up by 27 per cent on year-over-year basis, E&Y said.

"IPO activity was driven by the emerging markets, Brazil, Russia, India and China, which together raised $27 billion in a record 118 IPOs and accounted for seven of the 10 largest IPOs in the third quarter," it noted.

E&Y's IPO Initiatives Global Director Gil Forer said, "The record number of IPOs in the emerging markets shows that international investors continue looking for high return opportunities, as emerging markets are driving global economic growth."

As many as 13 of the Top 20 IPOs were from emerging markets, and interestingly only two of those chose not to list on domestic exchanges, Forer added.