Magazine article Global Finance

Brazil, China Lead Global IPO Rebound

Magazine article Global Finance

Brazil, China Lead Global IPO Rebound

Article excerpt

Brazil and China accounted for two-thirds of global capital raised through initial public offerings in the second quarter, with the United States and Europe lagging behind. The US market sprang to life in July and August, however, and some big-name brands have registered to make future public offerings.

"The IPO market generally trends the macro-economy, albeit with a time lag," says Gil Forer, global director of IPO iniriatives at Ernst & Young, who is based in London. "Historically, markets have taken at least four to six quarters to recover from an economic downturn," Forer says. While activity is recovering, the IPO market remains weak, and the outlook is uncertain, he adds.

There were 76 IPOs worldwide in the second quarter, up from 52 in the first quarter, according to Ernst & Young. The value of IPOs completed in the second quarter was $9.9 billion, up from $1.4 billion in the prior quarter.

"We have seen an increase in activity in the second quarter, but capital raised is at a fraction of the prior year," Forer says. "However, highly successful IPOs tend to emerge from post-recession periods." Having survived the ultimate stress test, these companies are often leaner and have demonstrated the resilience of their business models, according to Forer.

In the second quarter of 2008, there were 269 IPOs worldwide, which raised $38.2 billion in capital.

VisaNet, the Brazilian affiliate of credit card network Visa, raised $3.7 billion in its IPO in late June, making it the largest IPO ever in Brazil and the largest worldwide in the second quarter of this year. …

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