EY Report Shows Q1-2009 IPO Activity Completely Stalled – Only 50 Worldwide

As widely expected, exit strategies through initial public offerings to investors took a beating in the last three months, testimony to a slow capital market and unenthusiastic investors. Ernst & Young confirms that in its just-released Q1-2009 Global IPO update. There were just 50 IPOs worldwide in Q1-2009 raising about US$1.4 billion in capital, with only 2 deals over US$100 million.

Compare this with 78 IPOs worth US$2.6 billion in Q4-2008 and down a whopping 97% from Q1-2008 where 251 IPOs raised US$41.2 billion in capital (including Visa with US$19.7 billion, largest US IPO in history).

The top 3 IPOs accounted for 75% of capital:
1. Mead Johnson Nutrition - US$828.00 million, NYSE
2. Real Gold Mining Ltd - US$133.01 million, Hong Kong SE
3. Etihad Atheeb Telecommunication Company - US$80 million, Riyadh SE

The balance $350 million was raised by 47 companies or average of just $8 million per company, putting them barely in the small-cap range!

The deal threshold to make the Top-20 list has decreased from US$126.9 million in Q1-2008 to only US$6.84. By number of deals, most active countries were actually in Asia and Central Europe: South Korea (8 IPOs); Japan (7) and Poland (6); with emerging markets accounting for 34 or 68% of the 50 global IPOs.

More ominously for the M&A world, Dealogic indicates that 37 IPOs have been postponed or withdrawn in Q1 2009, following 85 similar in Q4-2008.

This is clearly a sorry state of affairs for all involved in mergers and acquisitions – accountants, transaction service professionals, investment bankers, commercial bankers, lawyers, tax expert and the like. According to E&Y, things are expected to continue along in a similar vein for a while till company performance, markets, confidence and investor sentiment improves.

Gil Forer, E&Y Global Director of IPO Initiatives echoes a hopeful thought: “Past recessions have shown that successful companies often emerge from the toughest times. The recovery of the IPO market will require at least two to three quarters of macroeconomic stability and for confidence to be re-built. However when the markets open and valuations improve, high quality companies will be poised to take advantage.”

More details on E&Y’s website http://ow.ly/2ieb