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China, Technology and Private Equity to Drive IPO Activity in 2010

posted Nov 7, 2009, 12:11 AM by Yale ReiSoleil   [ updated Nov 7, 2009, 12:16 AM ]
LONDON, Nov. 6 /PRNewswire/ -- The Ernst & Young Institutional Investor IPO survey 2009, highlights the likely markets and sectors that will lead listing activity in 2010. The survey, based on responses from more than 300 institutional investors across the world, found that China, technology and private equity are likely to drive IPO activity over the next 12 months.

IPO in emerging markets set to recover first from the economic downturn

Investors believed a handful of IPO markets worldwide would show recovery by the end of 2009. China (75% of respondents), India (57%) and Brazil (57%) were highlighted as the most likely with the US (31%) and Singapore (30%) suggested, as other possibilities. Ernst & Young's quarterly data has shown that this trend has already started in Q3 2009 and is likely to continue in Q4.
For many of the developed markets like the UK, Australia and Germany (all 57%) and Canada (62%) investors believed domestic IPO markets will start to recover between Q1 2010 and Q2 2011. A surprisingly large minority in many major markets - in France and Japan up to 42% - of investors thought a recovery could be more than 18 months away.

Top five industry sectors expected to recover first

Forty-nine percent of investors believe that the technology sector will lead IPO recovery globally, followed by financial services (43%), the oil and gas sector (38%), metals and mining (35%), consumer and retail (32%).

Private equity to lead the way

Investors forecast a variety of different types of companies in different jurisdictions, looking to float over the next year. Private equity backed companies are predicted to go public first in the US, according to 47% of the respondents, UK (45%), France (35%) and Germany (33%).

Top financial factors leading to IPO investments

The top financial factors for making an IPO investment were debt to equity ratios, highlighted by 63% of investors surveyed. This was a dramatic rise from ninth position in the 2008 survey, to first position this year. Other top factors include EPS growth (59%) and sales growth (55%).

SOURCE Ernst & Young