Longing for domestic IPO activity
Politics will be the watchword for European markets in 2017, says EY’s Global IPO Trends report. However global IPO markets in Q1 2017 saw the highest first quarter by global number of IPOs since 2007 and the outlook for accelerated growth in 2017 is optimistic, according to data provided in EY report.
Market gains in Asia-Pacific and the US hosting the first two megadeals of the year off to a brisk start in the first quarter of 2017, led global IPO activity. In the first three months of 2017, some 369 IPOs raised 33.7 billion $, a 92% yearover-year increase in the global number of IPOs and a 146% increase in global proceeds. Moreover, first quarter of 2017 was the most active first quarter by global number of IPOs since the same period of 2007 (with 399 IPOs raising 47.5 billion $).
Turkey saw two IPOs that raised a combined 120 million $ in 2016, the fewest since 2009. Having witnessed a consecutive two week long rally in Borsa Istanbul amid the presidential referendum, the optimistic outlook for Turkish market could also open a window of opportunity for Turkish companies. Some 10 companies are in the pipeline for listing in Borsa Istanbul, Chairman Himmet Karadag said in a press conference in late 2016.
TAB Gida, Turkish food retailer that holds the rights to operate Burger King in China, is also expected to go for an IPO soon. Goldman Sachs, Credit Suisse and EBRD had invested 150 million $ to the company in August 2016 and it could be valued around 2 billion $ in the potential 500 million $ IPO.
Enerjisa, Ozdilek REIT, Pasabahce, TUSAS, STFA, Vatan Bilgisayar, IGDAS, Turksat, Baskent Dogalgaz, Fenerium, Global Tower and Ziraat Bankasi were also listed as potential companies that could float their shares in 2017, according to local press reports.
Borsa Istanbul also has plans to go public by the second half of 2018. Global Ports Holding that cancelled its IPO at the very last minute in 2016 is now in an effort to go public in London Stock Exchange. Vakifbank, Turk Telekom, Turkish Airlines and Carrefoursa are also rumoured to conduct secondary public offerings but no official disclosures made by the companies yet.
The second half of 2017 could see a revival in the market, TSKB Deputy General Manager Hakan Aygen told Dunya in a previous interview. If there is no other extraordinary incident in the rest of the year, we could see the activity to take off by the end of second quarter, he said, adding that the large size offerings could take place with the increase in the confidence of foreign investors.
Even though the politics casts shadow on the markets, European IPO’s are on growth track. Businesses will be tracking not just the all-important national elections, but also the outcome of new US industrial, trade and interest rate policies that will impact the outlook for the whole Europe, Middle East Africa and India (EMEIA) region, says EY report.
Year of European elections
With growing geopolitical uncertainty, activity in the EMEIA region increased slightly by 8.5% y-o-y, ranking second behind Asia-Pacific by number of IPOs in the first quarter of 2017, and accounting for 21% and 15% of global number of IPOs and proceeds respectively.
Bolsa de Madrid, London Main and AIM, and Bombay Main Market and SME were the three most active markets by proceeds. India and the UK were the most active regional markets with 26 and 12 IPOs respectively, followed by Saudi Arabia, which listed seven deals on its new platform, “Nomu – Parallel Market,” an alternative equity market with lighter listing requirements.
Despite the moderate growth of IPO activity at the start of the year, EMEIA exchanges look set for something of an IPO resurgence in Q2 2017. The positive outlook is backed by solid economic fundamentals, with many major equity indices trending upward and low levels of market volatility.
Saudi Arabia is also taking steps to overhaul its economy, including plans to privatize the state-owned energy giant, Saudi Arabian Oil Company, which could become one of the largest IPOs by proceeds ever. It has been reported that London, the US, Hong Kong, Japan and smaller European exchanges are being considered as possible listing venues.
Against all conflicts and upcoming elections equity capital markets are hopeful and expect a further revival of IPOs on global scale. Second half could also pave way for a rally in Turkey, too. At least 10 companies are in the pipeline for Borsa Istanbul listing.