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Capital Markets and State of IPOs in 2012 - An Opening

Capital Markets and State of IPOs in 2012 - An Opening

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Published by proshareng
This piece attempts a review of the global situation in the IPO market, seeking to use comparative insights and analysis to understand the realities of the Nigerian bourse, and identifies why the current situation offers Nigeria a unique opportunity to clean house and rebuild a more virile primary market.
This piece attempts a review of the global situation in the IPO market, seeking to use comparative insights and analysis to understand the realities of the Nigerian bourse, and identifies why the current situation offers Nigeria a unique opportunity to clean house and rebuild a more virile primary market.

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Published by: proshareng on Apr 18, 2012
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Capital Markets and the State of IPOS in 2012 - Proshare
www.proshareng.com 
1
Capital Markets and IPOs in 2012 – An Opening?
 April 18, 2012 / Proshare Research
This piece attempts a review of the global situation in the IPO market, seeking to usecomparative insights and analysis to understand the realities of the Nigerian bourse, and identifies why the current situation offers Nigeria a unique opportunity to clean houseand rebuild a more virile primary market.
The IPO market in 2012 is expected to be much stronger than anticipated in somecountries while the same story cannot be told of other countries as the primary market(
IPO market 
) in 2011 left much to be desired; indicating that the raising of fresh capitalis either on hold or still far from such markets due to their rate of recovery from theglobal financial crisis (and in some specific climes, internal issues related to depth,liquidity and lagging economic conditions).Stock markets over the years have played
an integral part in enabling businessesraise capital to expand and grow their businesses
. Activities in this regard havehowever been lethargic in the aftermath of the global financial crisis.
http://proshareng.com/news/15531 
The questionable account of IPOs is definitely about to change in some markets despitethe general pessimism and underperformance of many popular offerings in 2011. Year2012 is forecast to see some very exciting underwriting activity
with more than 200companies waiting to go public
.
http://www.leap29.com/sector_reports/view/27
 24/7 Wall St. evaluated and compiled a
list of top 1Pos to watch for in 2012
http://www.leap29.com/sector_reports/view/27
. The list includes:BATS Global Markets.Caesars Entertainment CorporationThe Carlyle Group, L.P.FacebookGlam MediaGogo Inc.GrowOp Technology Ltd.Kayak SoftwareLiving SocialPlatinum Energy Solutions, Inc.Restoration HardwareSilver Spring Networks, Inc.Smith Electric Vehicles CorpToys R UsTransUnionTwitterYelp!BATS Global Markets which was founded in 2005 first filed to go public in May 2011 andplans to raise up to $100 million through the offering. Facebook which has an estimated$100 billion valuation is one of the many IPO debutantes whose shares will be in highdemand.
http://www.dailyfinance.com/2012/01/17/the-10-most-important-ipos-to-watch-in-2012/
 After many years in the European technology scene, software firms in the region headedfor initial public offering in New York, spurred in part by mounting investor interest inFacebook’s $5 billion share sale.
http://www.irishtimes.com/newspaper/finance/2012/0409/1224314548732.html
 
 
Capital Markets and the State of IPOS in 2012 - Proshare
www.proshareng.com 
2
While cities such as London, Dublin and Stockholm have proven fertile grounds fornurturing business, listing in the US may gradually drive operations there too; deprivingEurope of the full fruits of its tech boom.The growth is not of a Western focus alone as the IPO market in Korea is also poised toattempt a recovery in 2012 with about 70 companies led by Hyundai Oilbank waiting inthe wings to go public following disappointing performances in 2011.
 
Expected No of Companies to explore IPO Market in 2012Market Expected No of IPOs Remarks
US 200+ No of Companies wanting to go public in 2012Korea 70 Waiting in the wings to go publicIndia 5 Issue SucceededChina 500+ Applied for an IPO on the Shanghai or Shenzhen marketsWSE 25 IPO in Q1 2012LSE Group 16 IPO in Q1 2012NYSE Euronext 8 IPO in Q1 2012Spain (BME) 3 IPO in Q1 2012Nasdaq OMX 3 IPO in Q1 2012SIX Swiss 1 IPO in Q1 2012Luxembourg 1 IPO in Q1 2012Deutsche Boerse 1 IPO in Q1 2012
Source: Proshare Research/leap29
The Indian market has witnessed a five IPO offerings thus far in 2012 while the amountraised in the market keeps fluctuating - 2010 being the best/highest to date based onavailable data.
 
Indian MarketYearNo. of IPOs Amounted Raised ( US$) Issue SucceededIssueFailed
2007 108 6,789,244,000 104 42008 39 3,667,984,000 36 32009 22 3,861,316,000 21 12010 66 7,272,436,000 64 22011 40 1,208,714,000 37 32012 5 171,872,000 5 0
Source: Proshare Research/chittorgarh
Throughout the period under review, 2012 recorded a 100% success rate.
 
Capital Markets and the State of IPOS in 2012 - Proshare
www.proshareng.com 
3
The Nigerian Situation
A cursory look at the Nigerian Capital Market indicates that the IPO/primary market wasless active in 2011 and has remained the same till date; leaving the market to presentan activity base around ‘listings by introductions’. The market is severely challenged anddespite well-intentioned efforts by market regulators and operators, has failed to gaintraction. The reasons are well documented.In a recent news analysishttp://www.proshareng.com/news/16898, the structure of theNigerian market was revealed to have changed composition, with the retail market, allbut dead; and now dominated by foreign institutional investors. These set of investorsmade a quick getaway from the Nigerian stock market between 2008 and 2009 at thepeak of the global financial crisis, but have now increased their dominance of themarket, accounting for 81 per cent of total value of traded stocks in 2011.
 
In its March report on the Nigerian economy,Financial Derivatives Company(FDC)
 
indicated that despite the negative returns from the stock market, foreign investors havecontinued to take advantage of the low valuations to make returns.In February 2012, United Bank for Africa (UBA) suspended plans to sell shares to raiseadditional capital due to the weak local market conditions prevailing.http://www.proshareng.com/news/16252 
Here is a table reflecting the activity structure in the market.
 
Nigerian Capital MarketCategory 2006 2007 2008 2009 2010 2011 2012
TotalInitial Public Offer ( New Issues) 62 5 21 0 0 0 ? 88Public Offer (New Listings) 10 22 4 14 4 NA ? 54Rights Issues 7 20 5 2 4 NA ? 38Total 79 47 30 16 8 0 ?
Grand Total 
180
Source: Proshare Research/NS
Majority of the companies listed on the Nigerian bourse between 2008 and 2010 arecurrently trading below their listing prices with the exception of very few firms that aretrading a little above their listing prices.
 
Compan(ies)ListingDates No of Shares Listed (bln)ListingPriceCurrent Price(13-Apr-2011) % Return
ABBEYBDS 21-Oct-084,200.003.89 1.44 -62.98%AFRINSURE 17-Sep-0920,585.003.67 0.50 -86.38%AFROMEDIA 18-May-094,035.502.92 0.50 -82.88%ASOSAVINGS 25-Apr-088,679.153.67 0.50 -86.38%

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