Ernst & Young: US drives global PE-backed IPO activity

By Rob Starr, Content Manager, Big4.com

Global private equity-backed IPOs faced stiff headwinds in 2012, with companies raising US$20.5b through 103 IPOs in the first 11 months of this year–almost a 50% drop – compared to 2011, when US$38.6b capital was raised in 116 deals. While global trends saw Asia-Pacific as a key driver of global IPO activity this year, PE-backed IPO activity occurred mostly in the US, according to Ernst & Young.

On a market-weighted average basis, PE-backed IPOs saw an average increase of 11.4% in their first day as a public company. And most have held on to those initial gains, with PE-backed deals returning an average of 14.1% from their offer price as of early December. This compares with 9.5% for the overall market¹. Performance also compares favorably with most equity indices. In early December, the S&P 500 had returned 13.5%, and the MSCI World index of developed market stock exchanges returned 11.8%.

There were 4 PE-backed deals that exceeded US$1b in proceeds in 2012, compared with 7 last year and 10 in 2007. The largest of these was the Malaysian Healthcare operator IHH Healthcare, which was the fourth-largest IPO to price globally in 2012, and the fourth largest ever on the Bourse Malaysia. The IPO raised US$2.1b and achieved a market capitalization of US$7.1b, making it one of the largest listed healthcare providers in the world.