IPO Initial Public Offering Initial public offering Initial public offering

Classification

In the process of making an initial public offering of shares (IPO), investors may be offered shares of additional and/or main issues:

• PPO (English: Primary Public Offering) - initial public offer of shares of additional (new) issue to an unlimited number of persons. It is a "classic" version of the IPO.
• SPO (English Secondary Public Offering) - a secondary public offer of shares of the main issue (shares of existing shareholders) to an unlimited circle of persons. The IPO should be distinguished from the PO (English Public Offering) - a public offer of the company's shares for sale to a wide range of persons. It is understood that the company has already conducted an IPO and (or) its shares are already circulating on the stock exchange. In the process of conducting a public offer of shares (PO), investors may be offered shares of additional or main issues:
• Follow-on. The next offer of an additional issue of the company's shares to an unlimited number of persons. The company's shares are already circulating on the stock exchange.

In Russian practice, under the name IPO, secondary placements on the stock market are sometimes also meant (for example, the public sale of stakes in existing shareholders to a wide or limited range of investors).

Purpose of IPO

The IPO (Initial Public Offer), as the name suggests, is the first public sale of any company's shares to an unlimited number of persons in exchange trading.

What are the benefits of an IPO? First of all, the money received from the sale is invested in the development of the company, while the market value of shares is a fairly accurate indicator of the real capitalization of the business. In preparation for the IPO, the quality of corporate governance is improving. And the need to make the company as transparent as possible implies more stringent reporting and disclosure requirements for the company, which generally increases its business reputation. All of the above allows you to count on cheaper borrowing in the capital markets in the future. It will also be easier to conduct mergers and acquisitions.

There are several main objectives for the IPO, the importance of which may differ depending on the specific case:

• Raising capital in the company: holding an IPO allows the company to gain access to the capital of a much larger circle of investors.
• The presence of shares traded in the capital market gives the most objective assessment of the value of the company, which can be used as a tool for assessing the activities and motivation of managers, or a benchmark for merger and merger transactions.
• Shareholders of the company get the opportunity to sell all or part of their shares and thereby capitalize the expected future revenues of the company.
• The liquidity of shareholders' capital after the IPO also increases sharply, for example, banks are much more willing to issue loans secured by shares of quoted (public) companies than closed (private) companies.
• In Russian realities, the presence of a large number of investors after the IPO also serves to some extent as a protection against illegal actions of the state and potential raiders. After the IPO, the company becomes public, reporting is clear and transparent, which is the priority of most companies.

ICO — initial coin offering

Initial Coin Offering is a mechanism for raising funding for projects or companies in order to develop and release a product (service) to the market. Attracting investments occurs in cryptocurrency (bitcoins, ether, lightcoins, etc.). Unlike the IPO (public offering), the process of placing tokens is not regulated: almost no financial investments are required to carry it out, there are no minimum requirements for the issuer, audit and other related IPO procedures.

IPO of Russian IT companies

Main article: IPO of Russian IT companies

IPO Examples and Dynamics

2024

Manufacturer of packaging for milk and dairy products "Lambumiz" held an IPO at the Moscow Exchange

On October 30, 2024, Lambumiz entered the Moscow Stock Exchange. The company's IPO went at a price of ₽425 per share, which corresponds to the lower bound of the previously announced price range. Read more here

US IPO crisis

At the same time, the plans of companies preparing an IPO in the near future, for December 2024, are quite impressive:

Stripe|Payment System|Estimated $70 Billion

Shein|online clothing sales|$50bn valuation

Databricks|cloud storage|$43bn estimate

Epic Games|Gaming Industry|Estimated $31.5 Billion

Chime|neobank|$25bn valuation

Discord|social network|$15 billion estimate

Klarna|Buy Now Pay Later|$14.6 billion valuation

Impossible Foods|meat substitutes|$10bn estimate

Navan|Travel Management|Estimated $9.2 Billion

Circle|The Critical Industry|Estimated $7.7 Billion

Datavant|Healthcare IT|$7.0 billion estimate

Sierra Space|Aerospace Technology|Estimated $4.5 Billion

Skims|clothes from Kim Kardashian|$4.0 billion estimate

Asia leads in number of IPOs in January

Most of the IPO debuts in 2024 came from Asia-Pacific exchanges, with the Indian share market posting more listings than others. 11 companies began trading in the country in 2024.

2023: US IPO volume at 25-year low

The capital market in the United States does not function properly commensurate with the need for a real economy.

The volume of primary and secondary offerings is at a minimum over the past 25 years in absolute terms and at a minimum in modern history (at least 40 years) in relative terms to the capitalization of the stock market.

The IPO volume in the United States amounted to only $20.1 billion in 2023 against the devastating 2022 with $8.5 billion and a historic maximum in 2021 at $154 billion. In 2010-2019, the volume of placements was on average $47 billion per year according to Dealogic.

2023 is comparable to 2003 in the IPO, but then the conditions were completely different - money was 3.5 times less (M2 in 2023 about $21 trillion against $6 trillion 20 years ago) and capitalization 4.5 times lower (on average $43.1 trillion in 2023 vs $9.7 trillion in 2003).

Throughout the volume of placements (IPO, SPO, prefs) in 2023 placed $136 billion (level 2003) against $100 billion in 2022, $415 billion on average in 2020-2021 and $238 billion on average in 2010-2019.

If we estimate the entire volume of placements for the capitalization of the share market, from 2000 to 2015 it was on average 1.7%. The peak of placements in 2020-2021 on the wave of affordable and cheap money was in the conditions of a modest coefficient of 1.1% due to the overvalued market.

In 2022, the coefficient collapsed to 0.23%, in 2023 it was slightly better - 0.32%, Spydell Finance wrote.

According to other sources, the numbers are even lower: 2022-2023 turned out to be the worst for the history of the IPO market in the United States: the volume of transactions amounted to only $7.8 and $19.0 billion, respectively - this is even worse than in 2008-2009, when $23.1 and $19.2 billion were raised, respectively.

Despite the extremely high estimates of the public market, the IPO market is in an extremely depressed state: the median supply in the IPO in 2023 was a miserable $10 million.

The median revenue of companies participating in the IPO in 2023 was a microscopic $9 million.

2022

The volume of IPO in the world collapsed by 61%

In mid-December 2022, the British audit and consulting company EY published the results of a study of the global IPO market - companies that carried out the procedure for the initial public offering of securities.

It is noted that throughout 2022, the IPO activity on a global scale was influenced by increased market volatility and other unfavorable factors, in particular, the difficult macroeconomic situation and the crisis in the United States. With higher inflation and rising interest rates, investors have revised their policies. At the same time, individual regions such as mainland China, the Middle East and some countries of the Association of Southeast Asian Nations performed relatively well, despite a significant lag in general.

In 2022, according to EY estimates, 1333 IPO procedures were implemented: this is 45% less than the result for 2021. At the same time, the total revenue of companies collapsed on an annualized basis by 61% - to $179.5 billion. The average size of the deal shrank due to lower valuations and poor stock market performance. Although these figures show a sharp drop compared to 2021, the global number of IPO transactions increased by 16% compared to 2019 - before the start of the COVID-19 pandemic.

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Despite the fact that market activity has decreased in almost all areas, analysts distinguish several industries in which positive dynamics have been recorded. Thus, the technology sector is still the leader in the number of IPOs - in 2022 it accounted for 23% of the total number of transactions. At the same time, the energy segment dominates in terms of revenue with a result of approximately 22%. Among the mega-IPOs registered, which are defined as those that attracted revenue of more than $1 billion, the average result in 2022 was 45% more than in 2021. This is explained by the high assessment of energy companies against the background of the current geopolitical situation.

IPO activity in Northern South America and fell to the worst values ​ ​ since the World Economic Crisis. It is noted that in terms of the number of transactions, a 13-year minimum is shown, in terms of volume in monetary terms - a 20-year minimum. In particular, 130 transactions attracted about $9 billion, which, respectively, is 76% and 95% less than in 2021. Such weak indicators are explained, among other things, by policies aimed at combating. inflation

In the IPO market in the Asia-Pacific region, 845 transactions were carried out with a total revenue of $120.6 billion. This region has suffered less than others from the global economic downturn and geopolitical tensions. In the total volume of the IPO market in 2022, 63% of transactions were made here and 67% of all funds were received. At the same time, mainland China is setting new records for raising capital.

IPO activity in the EMEIA region (includes Europe, the Middle East, India and Africa) in 2022 decreased by 53% in terms of the number of transactions and 55% in terms of revenue. 358 IPO procedures were registered, which raised a total of $49.9 billion. While IPO activity in Europe declined 78% due to geopolitical turmoil, the performance of MENA (Middle East and North Africa) rose 115% as countries in the region benefited from their energy resources. In general, as noted, EMEIA accounted for five of the ten largest IPOs in 2022.

Analysts say IPO activity is likely to remain subdued in 2023, at least in the first quarter. But by the second half of 2023, favorable conditions may arise for the global industry to begin to recover.^[1]

IPO collapse in the United States at the end of the year

The capital market in the United States is frozen a little less than completely. 2022 was the worst in modern US history. It is difficult to imagine an even more devastating result than in 2022, because this is a complete bottom... literally.

The IPO volume has practically zeroed out - only 8.5 billion placements for the entire year (18 times collapse compared to 2021 - 153.5 billion), which is a complete failure for the American market and the dollar system.

2021 - was extreme, abnormal, because in a fit of speculative decay and excitement, any game was swept away at any prices. There SPAC was hysteria, and the redemption of toxic business with fictitious results at sky-high prices, so it is not surprising.

If we compare the period outside the monetary madness, the average volume of placements was 47 billion in the period from 2010 to 2019, i.e. a drop of 5.5 times from the norm. During the 2008-2009 crisis, an average of 27 billion were placed, as at the time of the collapse of dot-com in 2001 - a 3.2-fold drop in 2022.

If we compare with the capacity of the dollar system and the capitalization of the market, then the IPO collapse is 10-12 times relative to the crisis 2001 and 2008-2009. Here he is - the scale of the collapse and the crisis of trust.

Total placements, taking into account SPOs and prefs, fell 4.4 times compared to 2021 (99 billion versus 436 billion), and a 2.4 times drop relative to the 2010-2019 "norm." In absolute terms, 2022 turned out to be significantly lower than 2001 (185 billion) and 2008-2009 (260 billion), and relative to market capitalization - a collapse of 8 times!

Now it is safe to say that there has not yet been a more terrible year in modern history.

What does it all mean? Crisis of trust. The stock offering directly correlates with demand for corporate bonds. If shares are not bought back, then problems will be with the redemption of bonds (already happening - especially in garbage), which will make it difficult to finance the investment, operational and financial operations of companies.

In 2009, this problem was solved through the printing press and the increase in public debt. Now this trick will not be possible due to inflation and accumulated structural imbalances.

US IPO collapse in 9 months

The volume of IPOs in the American market collapsed 17 times in the first nine months of 2022 relative to the same period a year ago (7 billion vs 117.7 billion), the volume of SPO secondary offerings fell more than three times (58.5 billion vs 184 billion), and the volume of preferred stock offerings collapsed four times (11.3 billion vs 44.3 billion).

The total placement of shares of all types collapsed 4.5 times from 346 billion to 77 billion.

Further, the dynamics continued to deteriorate. The capital market in the United States for 11 months showed - the worst dynamics for the entire period of the existence of the modern architecture of the financial system (since 1985). The improvement in the situation in the financial markets for October-November does not in any way increase the ability of the business to raise capital.

Primary placements are literally zeroed. The investment banking industry has been destroyed a little less than completely. From January to November 2022, the total volume of initial placement (IPO) amounted to only 8.5 billion compared to 148.3 billion in 2021 - a drop of almost 18 times!

The IPOs were very weak in 2003 (18.1 billion), 2008 (26.7 billion), 2009 (27 billion) and 2016 (20.7 billion), and given that no large placements are expected for December, 2022 will be the worst in the 21st century in absolute placements.

The market capitalization is extremely high, even taking into account the decline in 2022, so the volume of placements regarding the market capitalization fixes an anti-record for 35 years.

The full volume of placements collapsed 4.5 times from 422 billion in 2021 to 92 billion in 2022 in the first eleven months. With a probability close to 100%, 2022 will be the worst in all types of stock offerings in absolute terms, since in 2003 the volume amounted to 127 billion, and in 2009 - 185 billion.

In relation to the volume of full placement to the market capitalization, 2022 is about 8 times worse than 2009. The case when they broke through the bottom and began to dig, the Spydell Finance channel noted.

How is this data useful? This best shows a measure of investor confidence in the prospects of the economy and business, as well as a measure of risk. In the context of investment bacchanalia and speculative madness, everything is bought indiscriminately, when there is a crisis of confidence and a liquidity deficit, the strategy changes to a more thorough selection.

Sharp decline in IPOs in the US and Europe, but growth in China

2021

IPO volume in Europe tripled

In 2021, 422 IPOs were held on the European market with the attraction of 75 billion euros, compared with 135 IPOs with the attraction of 20.3 billion euros in 2020. In the UK, the IPO reached £16.8bn. 2682 IPOs worth $607.7 billion were held on the global market. This is stated in the annual PwC IPO Watch Europe 2021 study.

The 10 largest European IPOs accounted for more than 20 billion euros in 2021, among them: InPost (3,220 million euros), Volvo Cars (2,315 million euros), Vantage Towers (2,217 million euros), Allfunds Group (2,164 million euros), Autostore (2,127 million euros), Auto1 Group (1,833 million euros), Azelis Group (1,771 million euros), Deliveroo (1,757 million euros), Dr Martens (1,684 million euros), Acciona Energia (1,509 million euros).

The most active exchanges in 2021 were London (100 IPOs of 19.462 million euros), Stockholm (78 IPOs of 11.850 million euros), Amsterdam (24 IPOs of 11.366 million euros), Frankfurt (18 IPOs of 9.609 million euros) and the Oslo exchange (54 IPOs of 5.912 million euros). The largest IPO in Europe InPost was held on the stock exchange in Amsterdam.

The PwC report noted that the most active sectors in Europe were technology, consumer goods, e-commerce, finance and industry. Analysts believe that investor activity in 2021 was affected by the resumption of global economic growth caused by the emergence of vaccines against the coronavirus COVID-19, favorable policies of central banks and low interest rates.

PwC expects investors to act more selectively and cautiously in the market in 2022.

Valuation and pricing issues will be the focus of investors, as well as the overall readiness of companies for IPOs and the reliability of their shares. However, the market growth prospects for 2022 remain positive, despite the increased selectivity of investors and the focus on quality, - noted in. PwC[2]

The number of IPOs in the United States for the first time exceeded 1000

In 2021, the total number of IPOs in the United States reached 1,000, and the amount of funds raised amounted to $315 billion, before that the figure did not exceed $200 billion. Such data at the end of December 2021 were released by analysts at Dealogic.

According to their estimates, more than 50% of initial public offerings of shares on the stock exchange (606) fell on the share of SPAC projects, of which 298 entered the stock market in the first quarter of 2021. Many SPAC deals have been accompanied by private equity investment (PIPE), allowing companies to obtain additional funds. Nevertheless, in the second half of 2021, attracting private investors to deals with SPAC was difficult, said Deloitte partner Previs Vaas. He believes that this trend will continue in the first half of 2022.

The largest in the United States in 2021 was the IPO of the American electric car manufacturer Rivian Automotive (approximately $12 billion). Other major primary offerings include the IPO of the taxi service Didi Global from China ($4.4 billion), Internet retailer Coupang from South Korea ($4.6 billion), as well as the operator of the stock trading platform Robinhood Markets ($2.1 billion).

Despite the fact that activity in the IPO sector in 2021 turned out to be a record, the dynamics of stock quotes after initial offerings is rather weak. Roughly two-thirds of companies that entered the open market in 2021 through a traditional IPO are trading below the offering price, PwC said.

Apparently, many companies still want to enter the open market, but higher investment returns are needed to maintain investor interest in initial offerings, said analyst David Ethridge.

He also noted that out of 60 IPOs of foreign companies (the volume of which is above $25 million) in the United States in 2021, 50% fell on the share of issuers from China. At the same time, since the end of October 2021, Chinese companies have not placed shares on US exchanges.^[3]

Record year in IPO volume: more than $600 billion

By November 19, 2021, global IPOs crossed the $600 billion mark, breaking their previous record in 2007.

The leader on this list is startup Rivian Automotive, which raised almost $12 billion this month.

The largest Asia China Telecom IPO in was 54 billion yuan ($8.4 billion) in August.

Polish parcel delivery company InPost SA took first place in Europe, placing 2.8 billion euros ($3.2 billion) worth of shares in Amsterdam in January.

Such huge growth raises concerns about the "bubble." "As monetary stimulus programs shrink and global growth slows sharply, markets could go for a correction," says Suzanne Streeter, analyst at Hargreaves Lansdown Plc. "Overrated companies will feel pain much earlier than others."

Unwillingness of companies from the Russian Federation to conduct an IPO - unwillingness to take risks associated with publicity

In early June 2021, Deloitte named the main reason for the reluctance of Russian companies to conduct an IPO - the business does not want to take on the risks associated with publicity.

Many are looking for an unattainable compromise: let us enter the market, but we will not say anything and, if anything, we will quickly leave the market at all. Closeness, fears that publicity could put them in a vulnerable position, related direct and indirect costs - all this, among other things, restrains the inflow of IPOs, "Ekaterina Trofimova, head of services for financial institutions in Russia and the CIS Deloitte, told RBC.

She noted that the demand for the activity and publicity of Russian companies by June 2021 remains extremely small. According to her, there are many large and relatively large businesses in Russia, which note a weak level of corporate governance, information disclosure, consolidation and even basic full-fledged reporting. At the same time, the level of management in such businesses may not be high enough to enter the open market.

The top manager of Deloitte also associates a small number of placements with economic reasons. The economy does not grow at a sufficient pace to provide growth in the market, moreover, it is very concentrated, so new "unicorns" rarely appear in our country due to the structure of the economy and the lack of new breakthrough industries and projects, Ekaterina Trofimova said. Another reason is, according to her, that the level of economic efficiency, profitability and real profitability of many projects is extremely low.

The publication notes that the Russian authorities are trying to support the IPO market. So, in March 2021, the first deputy chairman of the Central Bank of Energy Shvetsov proposed to launch an "IPO support conveyor," and the head of the Central Bank regulator Elvira Nabiullina made a proposal to exempt income from personal income tax from the sale of assets acquired during an IPO or after holding shares for six months.^[4]

2020: Biggest IPOs in history

In 2020, the manufacturer of the popular Chinese payment application Alipay (payment provider Ant Financial) plans to raise almost $34.5 billion in the IPO, which is taking place in Hong Kong and Shanghai.

2019

Tech sector leads IPO again

At the end of December, the consulting company Ernst & Young (E&Y) published a study on the global IPO market in the outgoing 2019. The dominant technology sector remained, which recorded 263 initial public offerings of securities totaling $62.8 billion.

In total, 1,115 listings were registered in 2019, which is 19% less than in 2018. These companies raised a total of $198 billion, which is 4% less than a year ago. Experts attributed this decline to geopolitical uncertainty and trade conflict between the United States, Europe and China.

Most IPOs in 2019 occurred in the Asia-Pacific region, but the number of transactions decreased by 1% (to 668) with a decrease in revenue by 8% (to $89.9 billion). The EMEIA region (Europe, the Middle East, India and Africa) became the second largest in terms of number (234) and IPO volume ($54.2 billion). Next are the countries of North and South America.

The number of transactions in EMEIA at the end of 2019 decreased by 47% compared to 2018, but in money they increased by 14%. Moreover, the money indicator turned out to be positive only in this region.

The study said exchanges in EMEIA remained strong, accounting for three of the top ten global exchanges by revenue in 2019 (Saudi Arabia, the United Kingdom and Germany) and four of the top ten IPOs in the world in monetary terms.

EMEIA in 2019 had the largest IPO in history: it was made by oil giant Saudi Aramco, which was valued at more than $1.8 trillion.

In 2019, 213 companies entered the exchanges of the Americas, which raised $53.9 billion. This is 20% and 10% less than a year ago, respectively.

The United States remains the main place for IPO in the region: the country's share was 77% in terms of the number of transactions and 93% in terms of revenue. In addition, 24 "unicorns" entered the American exchanges in 2019 - startups that, before becoming public, were valued by investors at more than $1 billion.

In 2019, the Canadian Stock Exchange and the Toronto Venture Exchange together held 18 IPOs, raising $295 million. This corresponds to 8% of the total IPO in the Americas. Brazilian exchange B3 held five IPOs for the year with revenues of $2.3 billion, and Chile - two IPOs with revenues of $1.1 billion.

On Japanese exchanges in 2019 there were 89 IPOs, which is 9% less than the previous year. The volume of listing in money decreased by 87%, to $3.6 billion.

As for the markets, the medical industry took the second place after the technology sector: in 2019, 174 companies representing healthcare entered the stock exchange. There were 147 listings in the industrial sector.

If we consider the amount of funds earned from the IPO, then technology companies also led. The second place was taken by energy companies ($32 billion), the third - by participants in the healthcare market ($22.5 billion).

According to analysts, in 2020, activity in the IPO part will grow, especially in the first half of the year, which should be facilitated by the easing of trade tensions and concerns about economic growth and other geopolitical problems, including Brexit and social unrest in Hong Kong. Markets are expected to become more volatile ahead of the US presidential election.

Market volatility will continue, and those seeking a successful IPO in the near future should be ready to take advantage of the opportunities expected in early 2020, says Paul Go, head of IPO at EY[5]

Saudi Aramco's record $29.4 billion IPO

In December 2019, the record for the world's largest IPO was broken when Saudi state oil company Saudi Aramco went public on the Riyadh stock exchange and raised $29.4 billion. It was part of a plan to reduce Saudi Arabia's dependence on oil. Crown Prince Mohammad bin Salman's Vision 2030 economic reform plan envisions investing money generated by the IPO to diversify the country's economy.

2017: IPO of Russian companies on foreign sites has lost its attractiveness

Preparing and conducting an IPO requires significant upfront costs, which include the budget for underwriters, auditors, advertising campaigns, roadshows and other expenses. The total amount can be in the millions. Not every company can afford such expenses.

One of the goals of the IPO is to attract funding, therefore, to place the company, they choose those markets in which all groups of investors, including institutional ones, are present. In the early 2000s, the Russian financial market lacked institutional investors (the so-called "long money"). Therefore, for the IPO, Russian companies chose foreign exchange platforms.

The first IPO abroad was held by VimpelCom, placing shares on the New York Stock Exchange (NYSE). It should be borne in mind that for IPOs at foreign sites, it is necessary to bring accounting statements in line with international standards, and an international company should conduct an audit.

The additional expenses did not reduce the interest of Russian companies in conducting IPOs abroad, since the cost of credit resources in international markets is lower.

The peak of placements occurred in 2005-2007, and often the IPO was carried out in the form of the so-called double placement - shares were placed simultaneously on the western platform (mainly on the London Stock Exchange) and on the Moscow Exchange. In the mid-2010s, Russian companies began to actively delist, buying back their securities on foreign exchanges.

In 2017, shares of about 80 Russian companies circulated on Western sites, mainly in the form of global depositary receipts. (For comparison: securities of about 600 domestic companies from different sectors of the economy are traded on the Moscow Exchange).

For 2017, taking into account the political and economic situation, the IPO at foreign sites lost its attractiveness. The developed infrastructure allows any investors, including foreign ones, to enter the Russian financial market, and the transaction execution system meets international standards. In addition, the shares of the Russian company on the Western Exchange at this time will be traded at a discount by default, and the associated costs will be significantly higher compared to placement on the domestic market. In addition, recently, Russian companies have begun to actively use such an instrument as Eurobonds to attract financing. Commentary by ^[6]

2016: PwC: IT market sees growth in IPO exits

According to a new study by PwC, in the third quarter of 2016, the high-tech sector saw an increase in the number of transactions and the volume of funds raised from ^[7] IPO^[8].

In total, according to PwC analysts, 20 IPO transactions were carried out in this sector, which is 43% more than in the second quarter (14 transactions).

From the point of view of the funds raised, the third quarter was the most successful this year: the amount of funds raised as part of the IPO amounted to $5.38 billion. Compared to last year, there is an 82 percent increase in the number of placements and a 31 percent increase in price terms.

Asia, Software Manufacturers Lead

Among the regions, the first place was again taken by the Asia-Pacific region, where 11 IPO transactions in the high-tech sector were carried out in the studied period of time. The US in the ranking looks quite stable: six IPO transactions, which is one more than in the second quarter of 2016. Three transactions were registered in Europe, which is one more than a quarter earlier.

The upheaval of exiting Great Britain continues to have a European Union negative impact on the British market, where once again no IPOs have been carried out.

The leading positions are again occupied by the segment, software as well as software and services on the Internet (a total of 13 out of 20 transactions). This trend, according to PwC, has been observed for the last five quarters.

due Internet to the relatively low cost of this business model, active user demand and clear plans of companies to achieve profitability.

Prospects

As noted in PwC, inspired by the successful results of recent IPO exits, such as, for example, cloud developer Twilio in June and developers of the messenger application Line in July, a number of companies are revising previously postponed placements and returning and speeding up the preparation of documents for their market debut.

2014

On September 18, 2014, the Chinese online retailer Alibaba was floated, and on September 19, American depository shares appeared on the New York Stock Exchange under the ticker symbol BABA. After the underwriters exercised the greenshoe option, this IPO became the largest in the world, the amount of funds raised amounted to $25 billion, the offering price - $68 per share.

Activity in the international IPO market continues to grow: in 2014, 1,206 transactions worth $256.5 billion were concluded, compared with the previous year, their number increased by 35%, and the volume of funds raised - by 50%. Such data are presented in a new study by EY "Global trends in the IPO market in the IV quarter of 2014." Although the maximum number of transactions was concluded in 2014 and the largest amount of capital was raised in the period since 2010, the volatility of international stock markets in October led to the fact that the forecasts for the IV quarter of 2014 did not meet expectations. As a result, 2014 was a successful year, but not a record year.

Maria Pinelli, deputy head of EY's global practice of providing services to companies in strategic growth markets, notes: "2014 was a successful year for the international IPO market, but still a little short of a record. Low volatility throughout almost the entire year, coupled with strong company revenue growth and a lack of alternative investment opportunities, has led to an increase in risk appetite for equity. Transactions in the IPO market were very successful: their average annual yield was 17.1%, which is 12.3% higher than stock indices. 2014 was the most successful year in terms of IPO after the outbreak of the financial crisis in 2007, even though the pre-crisis figures for the number of transactions and the amount of funds raised were never achieved due to the quarter IV that did not meet expectations. "

In 2014, professional investors continued to play a key role in the global IPO market, taking advantage of favorable market conditions, mainly in the USA, continental Europe and the UK, and realized assets acquired at the peak of the economic cycle in 2006-2007. Professional investors have completed 328 IPO deals, roughly 27% of their total, worth $124.4 billion, nearly half (48%) of the total value of global IPO deals. This is the best figure since 2001.

International transactions became a key driver of growth in activity in the initial public offering market in 2014. 129 such IPOs were conducted, representing 10.7% of the total - the highest since 2007. About 52% of international listings were carried out on American exchanges - this is 23.3% of all placements carried out in the United States. Other areas in demand from this point of view were London (22% of transactions), (9% Australia), Singapore (4%), (Germany 2%) and Hong Kong (1%). Although USA the market ranks first in terms of the number of transactions, the leadership in terms of value and financial results falls on mainland exchanges. From China the beginning of 2014 to the present, the profitability of transactions concluded on Chinese exchanges averaged 133%, compared with which the indicators of the United States (27.8%), (4%) Hong Kong and the main market of Great Britain (-0.3%) look extremely low.

High performance of cross-industry transactions

Companies from various sectors of the economy enter the initial public offering market: one individual economic sector does not account for more than 16% of all global ones. The IPO top three in terms of the number of transactions included companies in the sector (health care 193 IPOs, 16% of all global transactions), high-tech industries (167 IPOs, 14% of all global transactions) and industrial production (142 IPOs, 12% of all global transactions). The leading position in terms of the amount of funds raised was taken by companies in the high-tech industry, they conducted an IPO worth 50.2 billion, dollars USA half of which fell on Alibaba's largest IPO in history ($25 billion). Strong performance in both monetary and quantitative terms continues to be demonstrated by the energy industry and the financial sector, which raised US $39.9 billion and US $30.2 billion, respectively.

The United States leads in terms of funds raised, the countries of the Asia-Pacific region - in terms of the number of transactions

In 2014, the leader in the IPO market in terms of attracted capital was the United States, where 288 transactions were concluded for a total amount of 95.2 billion US dollars. The number of placements carried out has become a record for the entire period since 2004, and the amount of capital raised over the past 15 years. Most IPO transactions were concluded on the NASDAQ stock exchange - 14% of the total number of global transactions. The New York Stock Exchange leads in terms of funds raised (29%) even excluding Alibaba's IPO.

The most IPO is held in the markets of the Asia-Pacific region: in 2014, 546 transactions were concluded there for a total amount of 81.4 billion US dollars due to market recovery, Japan record levels of activity in the markets of Australia and New Zealand, as well as a constant flow of placements of companies from China and countries of Southeast. Asia The markets of the EMEIA region (, Middle Europe East, and) India Africa occupy the second place in terms of the number of transactions and the third in terms of the amount of capital raised - 353 IPOs totaling $74.9 billion.

Forecasts for 2015

In 2015, the market situation IPO will deteriorate somewhat due to the disappointing forecasts of the IFB to reduce economic growth and expected market volatility. At the same time, despite the growth of economies USA and, Great Britain market participants carefully assess the prospects of the eurozone and a number. In of developing countries connection with the change in the economic situation, we believe that in the first quarter of 2015 the same number of transactions will be concluded as in the fourth quarter of 2014, totaling 50 billion US dollars. dollars During 2015, we expect the main economic indicators to improve, which will ultimately slightly exceed the results of 2014.

2012

On May 18, 2012, the social network Facebook placed its shares in an IPO of $38 per paper, the upper limit of the price range. Thus, the value of the company's assets amounted to $104 billion, and the amount raised was $18.4 billion. Facebook's IPO is the largest among tech company placements and the largest in the United States since the placement of Visa, which raised $19.7 billion in 2008.

2011

On May 24, 2011 IPO , the Russian Internet company Yandex"" took place, during the first trading session on the American Nasdaq exchange, its shares added 55.4% in price. In terms of funds raised (1.3 billion) dollars , Yandex's IPO was the second among Internet companies after, Google which in 2004 raised $1.67 billion. USA

2010

The largest IPO in 2010 was held by the Chinese Agricultural Bank of China, which attracted 22.1 billion, dollars USA but the new record was set by a Chinese company. Alibaba

2006

In 2006, 1729 IPOs worth US $247 billion were held worldwide. In 2007, a significant excess of this indicator was expected. The leaders in terms of the amount of transactions are the United States and China.

In 2006, a record IPO of the state oil company Rosneft ($10.4 billion) was held.

2004-2007

In 2004-2007, an explosive increase in the number of IPOs was observed in Russia. During this time, companies such as Kalina, Irkut, Seventh Continent, Lebedyansky, VTB, Arsager, etc. placed their shares in Russian and Western markets.

1999

The real boom IPO is associated with the entry into the dot-com market in the late 90s of the XX century - in a record 1999, over 200 companies entered the market for the first time, which attracted about 200 billion. dollars USA

1997

The first Russian company to list its shares on the New York Stock Exchange (NYSE) in 1997 was OJSC VimpelCom Beeline.

Notes