Equity capital markets: the pull of the IPO


Set against a favorable backdrop of low interest rates, reduced volatility and increased risk tolerance among investors, 2014 started well for IPOs around the world. Activity in the largest markets returned to levels not seen since the tech boom at the start of the century. The value of IPOs globally almost doubled in the first quarter of 2014, according to Thomson Reuters.

This increase in activity was driven, in part, by private equity (PE) and venture capital (VC) firms as they, like many owners, sought exit strategies for their long-held assets via IPOs, a trend that has been building in recent years.

In 2008, PE-backed companies accounted for just 6 percent of global IPOs, but this was up to 19 percent in 2013. These deals tended to be larger: PE-backed deals accounted for 35 percent of all proceeds raised in 2013, with 182 of them raising US$56.4 billion.

Meanwhile, VC-backed IPOs around the world were also on the rise: according to Ernst & Young (EY), there were 127 deals in 2013, valued more than US$13 billion.

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