As reported by the Wall Street Journal’s Lynn Cowan today, China has taken the global lead in initial public offering activity for 2009.
As Ms. Cowan reported, should the pace continue, China will come out on top of "every other country, and even entire regions such as Europe and North America, for all of 2009."
Global IPO Dominance
China’s global monopoly of the year’s IPOs hardly comes as a shock given the sheer magnitude of the market and the Chinese government’s mandate to privatize more companies, according to Thomas B. Fox Jr., head of global capital markets for the Americas at UBS AG.
"So many areas are still government-held — natural resources, telecommunications, banks, transportation — it’s hard to imagine a country having an economy the size of China’s with virtually none of the companies being public," he said.
The figures compiled by research authority Dealogic, as reported in this article in Forbes Magazine, illustrate that 38 companies have raised a total of $15.4 billion in their IPOs in China so far in 2009, making China the world’s largest IPO market this year.
Although U.S.-based deals were nowhere near the levels seen before 2008, when there were on occasion more than 50 deals in a quarter, it will take some time for more U.S deals to come into the market given the SEC’s three to fourth month processing period. As a result of the lag time, there will be a more significant flow in IPO activity next year, as the companies registering now start to launch.
SEC Application Process to Blame for Poor U.S. Showing?
In light of the SEC’s delay in processing new offerings, an argument can be made that the bloated bureaucracy encumbering the pace of applications has made the U.S. less competitive in the global landscape when it comes to raising publicly-sourced funds for flourishing companies. A quick look at the chart illustrates the glaring divide: the U.S. can lay claim to only one IPO while China can boast eight (Chart via Wall Street Journal via Dealogic)
Trend to Watch: China Will Boast IPO Dominance Into the 2nd Quarter of 2010