Larger Deals Drive Increased Global IPO Activity in 2005 Says Ernst & Young.

LONDON -- IPO landscape shifts as nine of the ten biggest deals in 2005 list outside the US; Europe rebounds strongly; and China growth fuels Asia IPO markets

Global IPO activity saw sustained growth in 2005 according to figures released today by Ernst & Young and Thomson Financial. In the period from January through November 2005 $138.5 billion was raised in 1268 IPOs, already exceeding the $124 billion raised in the whole of 2004.

This increase in capital raised was led by larger deals in 2005 - there were 59 deals raising more than $500 million in January to November 2005, compared to 44 of a similar size in the same period in 2004. The three biggest deals of 2005 exceeded the previous year's largest, Belgacom ($4.4 billion raised), with the IPO for a Chinese State bank, China Construction Bank, raising $9.2 billion - the biggest IPO in five years, and the largest Chinese enterprise IPO ever. The next two largest deals in 2005 were for state-owned French enterprises: Electricite de France ($7.3 billion raised) and Gaz de France ($4.8 billion).

These deals helped France overtake the UK into third place in the top ten countries by total capital raised, behind the US and China, with 28 deals worth $14.8 billion. This led a European rebound - the region saw a 68% increase in capital raised in 2005 to $51.2billion, in 290 deals. While none of the top three deals were US deals, the US accounted for the largest number of IPOs greater than $500 million, with 14 IPOs raising $10.2 billion. The US also retained first place in terms of both total capital raised and number of deals.

"We are seeing the continued globalization of the capital markets with increasingly more companies, investors and exchanges looking worldwide for growth opportunities," Gregory K. Ericksen, Ernst & Young's Global Vice Chair Strategic Growth Markets said. "This is causing a shift in the IPO landscape. Only two of the 20 largest IPOs in 2005 were listed in the US and the fact that China Construction Bank, the biggest IPO in five years, chose to list in Hong Kong challenges the perception that companies above a certain size have to list in the US, where around half the world's capital is invested. It also sends a very strong signal about the health of the Asian markets."

"The strong European rebound was led by the two big French IPOs and the strength of the emerging Eastern European markets, particularly Russia and Poland. Another significant factor is the continuing popularity of the Alternative Investment Market (AIM) in the UK, which accounted for 82% percent of UK deals and 90 foreign transactions in 2005. Many more companies are considering listing on the AIM, an increasingly attractive option due to the tax breaks and the lower cost of compliance with regulations in comparison with other markets," said Ericksen.

Highlights of the survey include:

--$138.5 billion raised in 1268 IPOs worldwide from January to November 2005, compared with $112.2 billion raised in 1352 deals in the same period last year.

--Larger deals led the increases in capital raised in 2005 - there were 59 deals raising more than $500 million from January to November 2005, compared to 44 deals in the same period in 2004.

--Europe rebounded strongly with $51.2 billion in capital raised - up 68% increase on 2004, although the total number of deals fell slightly.

--Established European markets did well: France saw transactions up 17% and total capital raised up 163%; Germany a 360% increase in number of transactions and a 102% rise in capital raised; in the UK the number of deals dropped 40% but total capital raised was up 9%.

--Emerging European markets also gave a strong showing, particularly Russia (deals up 33%, capital raised up 386%).

--IPO activity in Asia dropped off slightly with the total number of deals down by 26% to 531 and the total capital raised down 4% to $38.0 billion.

--China continues to lead in Asia with a 43% increase in the amount of capital raised, while Japan saw a drop in both the number of deals - down 22% and total capital raised (down 59%).

--Although still top of the table, the US saw a fall both in the number of deals, down 5% to 175, and the total capital raised, down 21% to $27.9 billion.

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