Corporate Finance : Equity Capital Market off to Strong Start

Global Equity/DRS

Global equity and equity-related issuance rose 24% in the first quarter from the same period a year earlier, according to Thomson Financial. The $144 billion raised in the equity capital markets in the first three months of 2006 included $34 billion of initial public offerings, up from $27 billion in the first quarter of 2005, and was the strongest start for IPO issuance since 2000. The US market for IPOs cooled from a year earlier, however, falling 31% to $7 billion in proceeds in the latest period.

Goldman Sachs was the leading underwriter of worldwide equity and equity-related issues in the first quarter of 2006, with $21.3 billion of proceeds, followed by Citigroups $13.8 billion and Morgan Stanleys $11.3 billion, according to Thomson Financials rankings.

Asian equity capital issues totaled $20.5 billion in proceeds for the first quarter, up 37.2% from the same period last year. South Koreas largest department store chain, Lotte Shopping, raised $3.7 billion in a February IPO that was by far the biggest of the first quarter and the largest ever for a retailer. Goldman Sachs and Nomura were the underwriters.

Japans equity capital market volume totaled $22.4 billion in the first quarter of this year, up 75% from the first quarter of 2005, and accounted for 45% of Asias total, according to Dealogic. The largest Japanese equity offering, as well as the largest worldwide in the first quarter, was Sumitomo Mitsui Financial Groups $5.3 billion follow-on issue via Goldman Sachs and Daiwa Securities.

Nomura and Daiwa Securities were neck-and-neck in the first quarter totals for Japan, with Nomura leading the volume ranking with a 30.9% share, while Daiwa topped the revenue ranking with a 31.1% share, Dealogic says.

IPOs registered with the US Securities and Exchange Commission totaled $11.6 billion for the year-to-date through April 11, 2006, of which 27% was from non-US companies, according to Dealogic. Some 58% of SEC-registered IPO volume in March was from foreign issuers, the highest percentage since 70% in March 2004.

Mexico-based Grupo Aeroportuario del Pacificos $1 billion February IPO was the largest by a non-US company on a US exchange this year through April 11, Dealogic says. Credit Suisse was the lead underwriter for the international offering syndicate. The other members were Citigroup, Deutsche Bank and Santander Investment. Accival, part of Citigroups Banamex, was the lead underwriter for the Mexican offering. The Bank of New York is the depositary for the American depositary receipts.

Brazilian airline TAM raised more than $800 million through preferred shares and ADRs in March, including a secondary offering of stakes held by seven private-equity funds. Credit Suisse and Pactual Capital were the underwriters, with Merrill Lynch as joint lead manager and Citigroup, JPMorgan and UBS Investment Bank as co-lead managers. JPMorgan is the depositary for the ADRs, which are listed on the New York Stock Exchange.

Legrand, the worlds largest maker of power plugs and switches, raised about E1 billion in early April, making it Frances biggest IPO so far this year. JPMorgan, BNP Paribas, Lehman Brothers and Morgan Stanley managed the sale, while Credit Suisse, Goldman Sachs, HSBC Holdings and Socit Gnrale were joint co-lead managers.

Sydney-based Dyno Nobel, the worlds second-largest explosives manufacturer, raised $800 million in an IPO on the Australian Stock Exchange last month. Macquarie Bank and Credit Suisse were co-lead managers.

German real estate investment and management company Patrizia Immobilien sold stock worth E403 million in an IPO on the Frankfurt stock exchange at the end of March. Deutsche Bank, JPMorgan Securities and Sal. Oppenheim handled the sale.

Enel, Italys leading electric company, selected JPMorgan as successor depositary for its NYSE-listed ADR program. Partner Communications of Israel selected The Bank of New York as successor depositary for its ADRs, which trade on Nasdaq and on the London Stock Exchange.


Gordon Platt