Even Facebook, the third largest IPO in the US history, could not stop the global IPO market from bleeding. The resilience built in 2010 continued to wilt in 2012 under the heavier Chinese stock markets and debt burden of Europe.
The outlook for the global IPO market in 2012 was rightly pivoted on volatility as 2011 saw the major IPO companies and their investors adapting to a market environment where unpredictability was a custom.
Lack of IPO activity on the Shanghai and Hong Kong exchanges dragged down Asia Pacifics market share, and the absence of a big offering further shriveled the size of Europe. Whereas, North America leapt for a bigger share of the global IPOs, thanks to Facebook.
All in all, the global IPO market shrunk by almost 30 percent YoY according to Renaissance Capital IPO Intelligences annual review 2012, with proceeds lowest since 2008. With apparent reasons like Chinas lull, Asia as the brightest spot for IPO lost some of its shine to North American companies.
Moreover, the risk of further deterioration to the global economy from the eurozone crisis and the unrest in the Middle East along with the US presidential elections meant that the opportunities to raise capital were fleeting for companies entering the public eye. Even the $16 billion Facebook IPO lacked the punch many were expecting.
For Pakistan, the picture paints a weaker demand for fresh capital at the IPO stage was even more depressing. Even though stock market posted attractive gains in 2012, the IPO landscape continued to remain incredibly quite as there were only three equity public offering compared to four during last year. According to a research note by Topline Securities, this compares unflatteringly with the 10-year average of 11 offerings a year.
Financial, industrial and technology IPOs raised most proceeds globally of all sectors in 2012. The trend was similar in Pakistan: The total proceeds during the year amounted to Rs500 million which included Rs100 each by Next Capital and Aisha Steel, and Rs300 TPL Trakker.
Even though the economic activity around the world threw cold water on the IPO market in 2012, the latest word by Ernst & Young Global sees the IPO activity picking up in 2013. This is primarily due to some improvement in the US and European IPO markets in the fourth quarter of 2012, strengthening US economy and a recovery in the latter half of 2013 in Asia and Europe.
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