There is little doubt that global economic uncertainty and market volatility are here to stay. The question is, how can companies integrate equity as one of their funding strategies in an unsettled environment? Increasingly, they have looking beyond their domestic markets and traditional financing centres such as London and New York, and seeking a more diverse pool of capital to help fulfil their global ambitions. But what influences the decision on where to list? What are the trends, and where are they leading? Enriched with data and interviews with companies and global capital markets advisers, this study— by PwC and Baker & McKenzie—explores the evolution of cross-border IPO activity over the last decade, describes its main drivers today, and anticipates the likely trajectory of an important market trend.
With an increasingly sophisticated capital markets infrastructure in several emerging markets, there continue to be more opportunities for issuers to raise capital beyond the traditional listing centres.
Here are some of the other key findings of our study, gathered from the last decade of data:
As the graph below shows, the first decade of the 21st century saw an intensification of cross-border IPO activity—despite the slump, attributable to the global economic crisis of 2008 - 2009. Still, the market has not yet returned to its pre-crisis levels.
Overall, between 2002 and 2011, cross-border IPOs accounted for 9% of total IPO activity and 13% of all proceeds. Here are some of the other important trends from the decade:
The map below shows the inter-regional cross-border flows between 2002 and 2011—and highlights some of the large-scale trends.
Where a company chooses to list is a significant factor in determining its success as a listed company. Listing away from its natural market could lead to problems that outweigh the benefits of the transaction. Indeed, over one third (36%) of investment bankers told us that they expect de-listing to become a trend in the next few years.
So why choose to take that risk? Our study participants pinpoint ten reasons for undertaking a cross -border IPO. They fall into two categories—financial and nonfinancial. (Click on the graph to learn more.)
What trends are likely to shape cross-border activity in the short- to medium term? We have identified five key factors: