India garners $4 bn from 16 IPOs

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New Delhi, July 3:: The credit crunch and ensuing financial turmoil notwithstanding, emerging markets continues to drive IPOs globally with India accounting for one-third of the total amount raked in by BRIC nations in the first three months of 2008.

According to global consultancy firm Ernst & Young, Brazil, Russia, India and China (BRIC) countries together raised 13 billion dollar through IPOs in the first quarter of this year and India chipped in with four billion dollars from 16 public offerings.

During this period, 41 billion dollar was raised through 236 IPOs across the world.

"The credit crunch and volatile market conditions have inevitably led to a slowdown in global IPO activity. Seeing the impact on the overall global IPO market performance, Indian IPO markets have done reasonably well. When markets stabilise, the key drivers of Indian markets will be exit-seeking PE firms and companies in the infrastructure, real estate and energy sectors," R Balachander, Partner & IPO Leader (Strategic Growth Markets) Ernst & Young, India said in a statement.

Even as the mature markets experienced slowdown, emerging markets especially BRIC economies are continuing to drive the global IPO appetite. In the first three months, BRIC nations raised 13 billion dollars through 47 IPO, Ernst & Young noted.

"In recent years we notice a surge in IPO activity in emerging economies, especially the BRIC countries. Global investors with an appetite for risk have been shifting assets to fast-growing emerging markets where higher returns can be achieved.

Soaring liquidity, flourishing local economies and rising consumer demand are among the many factors fueling emerging markets growth," Balachander pointed out.

In the first three months of 2008, Asia-Pacific region had a market share of 60 per cent in terms of the number of IPOs followed by Europe, the Middle East and Africa (EMEA) and North America accounting for 26 per cent and 14 per cent, respectively.

On the other hand, 83 companies worldwide withdrew their IPOs while 24 postponed the same in the first quarter due to sustained volatility and stringent valuation.

According to Ernst & Young's fifth annual Global IPO Trends Report 2008, global IPO activity reached record levels in 2007, with capital raised at an all-time high.

Last year, 287 billion dollars was raised globally through 1,979 IPOs as compared to 246 billion dollars raised through 1,729 deals in 2006.

In 2007, propelled by foreign capital inflows, robust corporate profits and a soaring Sensex, India raised 8.8 billion dollars through 106 public offerings.

However, the country raised only 7.23 billion dollars from 78 IPOs in 2006.

"Surging corporate profits and foreign inflows propelled India's IPO markets in 2007. India's IPOs grew in size and quality due to greater institutional depth, a supportive VC and PE ecosystem and stringent regulatory standards," Balachander added.