2010 – The return of the IPO?

Asia leads the way with the RoW on its coat tails

Abchurch MD, Henry H-T draws together some encouraging signs for the global IPO market

According to a report recently issued by Ernst & Young, the global IPO market has begun to show signs of recovery which will come as a relief to most financial intermediaries around the world. In the first quarter of this year there have already been 267 successful IPOs raising a total of US$53 billion, this figure dwarfing the comparative period in 2009 in which there were only 52 IPOs raising a paltry US$1.5 billion. It will come as no great surprise that the return of the IPO in Asia - China in particular - is leading the way, having raised a total of US$19 billion via 109 IPOs, accounting for 41% of all global IPO activity. In the last 24 hours, the Agricultural Bank of China has reported that it preparing for a float looking to raise a staggering US$25 billion which would make it the largest share offering ever, exceeding even the IPO of China’s ICBC which raised US$21 billion back in 2006 when the markets were much more buoyant.

So how has London fared in all of this activity? Well, not too badly when compared against the rest of Europe. London has raised a respectable US$2 billion via 11 IPOs in the period, with companies including Barrick Gold, CPP, Super Group and Promethean successfully joining the market. From a fairly lifeless IPO market in Europe during 2009, there have been 39 floats in the first quarter raising US$8 billion (the largest number since the second quarter of 2008), and this activity has outstripped the US which managed to raise only US$4.2 billion via 25 IPOs.

Whilst there remain some concerns about volatile market conditions at the start of the year, it is widely anticipated that investors will continue to return to the European and North American markets as the global economy improves which will be good news for all of us here in the City. With plenty of activity planned, many corporates and issuers are waiting for the right window of opportunity to complete their listings and to generate the best valuation. Let’s hope the strong start to global IPOs in 2010 continues and starts to filter into London post the General Election.

Henry




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Five-minute Abchat: Florence Fox-Andrews, Abchurch Intern

This week we grilled our latest Abchurch Intern, Bristol University student Florence Fox-Andrews, on the Intern program, what she enjoyed and any words of wisdom she has for prospective applicants.

What did you want to be when you grew up?

When I was younger I was absolutely obsessed with the Famous Five and all of Enid Blyton’s books. I loved reading and watching murder mysteries, especially Midsomer Murders. When I grew up my dream was to become a detective and solve crimes, I think probably quite strange for a 9-10 year old!

Why did you apply to be an intern at Abchurch?

I had the opportunity to apply for some work experience at Abchurch and jumped at the chance. I wanted to experience working in the City first hand and Abchurch has allowed me to gain an insight into the workings of Financial PR and City life.

Describe your role in ten words or less (if that’s possible!):

I have been doing some administration work, sitting in on meetings between clients and analysts, and been annoying everyone with questions! I didn’t have to make any coffee while I was here – which is lucky, my coffee making is pretty poor!

If I wasn’t talking to you now, what would you be doing?

I would be researching new investor and trade magazines and inputting information such as feature deadlines, when it goes to press, notes on circulation etc. onto an Excel Spreadsheet for the Company’s records.

What is the most interesting thing about the program?

I find the diversity of all the different clients fascinating and I have gained an understanding of the role Financial PR plays in the development of growing companies, whether private or listed, and the important relationships forged with media and analysts which are crucial to communicate key messages.

Did you have any ideas about PR that you found weren’t (or were) true?

There is the rumour that PR companies exist to manipulate and fabricate stories. Having never experienced PR before, I assumed this was true. However, after working with Abchurch and experiencing the day-to-day work, I can now understand and appreciate how communicating a clear and consistent message is vital in the role of Financial PR.

What advice would you give to someone who wants to be an Intern at Abchurch?

My advice would be that - as well as an interest in the media and PR - you have to be ambitious and confident. As long as you are friendly, enthusiastic and energetic and willing to put in time and effort, you will be certain to achieve the results you wish.

For more information and an application form for our Internships, please contact recruitment@abchurch-group.com

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Worried about sustainability? Get a Brazilian

Given the ongoing debate over the sustainability of biofuels, I was keen to hear for myself the story that is the Brazilian ethanol economy. Hence, Abchapess finds herself at the “Brazilian Cleantech Breakfast” on the 11th March in Rosenblatt’s offices mulling over how to both communicate and eat a bowl cereal while holding a cup of coffee, a handful of business cards as well as managing the usual female trappings of handbag and coat in a room the size of a two man tent containing a not inconsiderable number of overly familiar Brazilians and excited greenies. Despite the general melee, the crowd finally managed to squeeze itself into the limited chairs to the clutter of breaking plates and falling cutlery at which point the speakers had their opportunity to sell the class-leading benefits of the renewable energy market in Brazil.

For those who aren’t aware of the powerhouse that Brazil is in the alternative fuel world here are a few facts. The first car to ever run on ethanol was produced in Brazil in 1979 having been experimenting with the liquid since the 1930’s. This legacy has resulted in Brazil now consuming more ethanol than petrol. Moreover, around 45% of all energy produced in Brazil comes from renewable sources. Unsurprisingly, a number of entrepreneurs, small companies and multinational corporations have been jumping onto the Brazilian bandwagon over the last few years.

The Energy Revolution

Paolo Wrobel, of the Brazilian embassy, kicked off the proceedings by setting the scene for the energy revolution that is happening in Brazil. Huge revenues of oil and gas have been discovered off the coast of Brazil, in particular natural gas. This relatively clean and abundant resource allows for a number of opportunities for British companies to provide anything from services to machinery. On their biofuels strategy, the market has been boosted by the Environmental Protection Agency classifying ethanol from sugarcane, an area in which Brazil is world leader, as an “exceptional fuel”. This is due to the complete avoidance of “food vs fuel” and the fact that nothing is wasted. The leftover bagasse is used to produce electricity which powers the plant, even providing excess electricity for the grid. Most importantly sugarcane from ethanol is easily scalable and competes very favourably in financial terms with fossil fuels. A no-brainer it seems.

Up to the Challenge?

The final word at the Breakfast was left to Olivier Mace Head of Biofuel Strategy and Regulatory Affairs at BP. As a global fossil fuel giant, BP’s commitment to dedicating time and money to renewable energy has been impressive. They see two big challenges facing them: energy security (we will double our primary energy requirements by 2050) and climate change. Nothing new there. He discussed four criteria for biofuels which would allow them to compete with traditional fossil fuels in transport; cost, low carbon, sustainability and scalability. If biofuels could beat other types of fuels, including fossil fuels, in all four categories, it would be one of the only viable options for mass market use; the other of course being electric vehicles. His personal opinion (obviously) was that the most economically sensible option would be the combination of energy efficient internal combustion engines with the use of low carbon fuels. Working to that belief, BP Biofuels invested in Brazil’s sugarcane ethanol market in 2008 through acquiring 50% of an integrated facility, consisting of an ethanol production factory on a sugar cane estate. Brazil has attracted a number of other international investors similar to BP in the recent years, including Shell which has recently announced its intention to tap into a market which was once dominated by wealthy local families.

The conclusion that can be drawn from this may seem surprising. First generation biofuels may actually negate the need for second generation biofuels in much of the world. In fact many methods are well established, hence low-risk technologies, non-competitive with food crops and applicable on an industrial scale. We have to bear in mind however, that sadly the British climate and environment is not comparable to Brazil’s. We are in fact 35 times smaller and considerably wetter meaning the requirement to invest in second generation methods such as using municipal waste as a feedstock is crucial if we are to secure our own ongoing fuel supply.

Hannah

Photo courtesy of ozjimbob on Flickr, through a Creative Commons License

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