Kiwi floats beat Europe in fourth quarter

NZ raised more funds in IPOs in the fourth quarter of last year than all of Europe combined. Photo / Richard Robinson

New Zealand raised more funds through initial public offerings in the fourth quarter of last year than all of Europe combined, international advisory firm Ernst & Young said yesterday.

The New Zealand IPO market bounced back into life in the fourth quarter last year - raising US$388 million ($462 million), which mostly reflected the flotation and NZX listings for Summerset and Trade Me shares after what had been a quiet period for domestic IPOs throughout the year.

The comparable figure for crisis-hit Europe was US$217 million for the quarter, Ernst & Young said in a global IPO update.

The Government intends to partially privatise state-owned power generator and energy retailer Mighty River Power in the third quarter of this year under its so-called mixed ownership model.

It also intends to sell down its 100 per cent ownership of the state's other energy companies - Meridian, Genesis Energy and Solid Energy - although the order and timing of these IPOs has yet to be determined. The Government also intends to reduce its majority holding in Air New Zealand, but again, no timetable has been set.

Despite the uncertainty over timing, Ernst & Young partner Gareth Galloway said the successful IPOs of late last year showed that there was a healthy appetite for New Zealand assets. "It signalled that there is a potential activity there."

He said the interest shown in last year's IPOs suggested there would be a "second wave" of IPO activity later this year when the Government gets its privatisation programme under way.

Ernst & Young, which was involved in both the Trade Me and Summerset IPOs, said global IPO activity in the first quarter had fallen sharply to its lowest point since the second quarter of 2009.

So far this year, a total of 157 deals has raised just US$14.3 billion around the world, down by 69 per cent by value compared with the same period last year.

The average deal size fell to US$91 million compared with US$157 million in the first quarter of 2011, a 42 per cent drop. Seven IPOs were postponed and 36 withdrawn in the quarter, compared with five and 53 respectively for the same quarter in 2011.

In terms of pricing, 81 per cent of global IPOs in the quarter priced within or above their initial filing range, while just 7 per cent were priced above their initial range.

Ernst & Young IPO specialist Maria Pinelli said that despite the difficult market conditions, there were a number of positive signs of fundraising activity worldwide.

She said the current year was already seeing more cross-border activity, with companies from all regions listing on exchanges like Hong Kong, London and the United States.

China was by far the biggest market for IPOs over 2011, with US$61.4 billion raised from a total of 354 deals, followed by US$38.4 billion for North America and US$33.14 billion for all Europe.