News Column

London Stock Exchange expects surge in share offerings

May 23, 2014

Bloomberg News



London:The London Stock Exchange (LSE) is expecting the busiest year for initial public offerings from developing countries since 2008 as companies from Dubai to India tap growing demand for riskier assets.



"There's been a re-emergence of appetite for emerging- market stocks across the board," Ibukun Adebayo, co-head of emerging markets at the LSE, said during an interview on Thursday. "The IPO numbers we are seeing this year are the best since 2008 by a long way."



Seven companies from emerging and frontier countries including Russia and India have sold shares in the UK this year, up from three in the same period of 2013, according to the LSE. More African and Middle Eastern issuers may follow after Nigeria'sSeplat Petroleum Development started trading in London, Adebayo said.



Emerging-market companies are taking advantage of increasing interest in high-yielding assets by raising capital abroad and tapping a larger pool of investors. Developing-country businesses have so far raised as much as 1.1 billion pounds ($1.9 billion) from share sales in London this year, up eightfold from 2013, LSE data show.



Indian online-fashion company Koovs, which held an IPO amid increasing competition in the local e-commerce market, has advanced 3.3 per cent since it started trading on the LSE on March 10. That compares with a loss of 8.3 per cent for the Morgan Stanley Retail Index, which tracks the biggest and most- actively traded companies in the sector.



'Significant deals'

The pipeline for IPOs from Middle East businesses will be "buoyant" despite surging local markets as companies seek to broaden their exposure, Adebayo said. The seven-emirate federation of the UAE, home to three bourses, is set to offer two "significant and sizable deals," he said.



Emaar Properties, developer of the world's tallest skyscraper in downtown Dubai, said in March it planned to raise as much as $2.45 billion with the sale of a 25 per cent stake in its retail arm business in London and on Nasdaq Dubai. The plan, which would be the largest IPO in the Middle East since a real-estate crash in 2008, follows the share sale of luxury developer Damac Real Estate Development in December.



'Undue influence'

Developing-nation IPOs are set for their fastest pace since 2010 this year, boosted by local and overseas listings, Ernst & Young said in February. The success of developing-market companies already trading on the London exchange, such as Abu Dhabi-domiciled NMC Health Plc, have set a precedent that others want to follow, according to Adebayo.



The diversified health- care company was the sixth-best performer last year on the FTSE 250 Index of the biggest companies traded in the UK.



"There have been a number of high-liquidity companies coming through," Adebayo said. "These companies are delivering on their targets without undue influence from external factors."



Nigerian efforts to reform its oil industry and revisions to Kenya's mining code will lift demand for IPOs from two of Africa's biggest economies, Adebayo said. Seplat Petroleum has advanced 6.9 per cent since the shares started trading in London.



Economic growth in sub-Saharan Africa is projected to accelerate to 5.5 per cent in 2014 from 4.9 per cent last year, according to the International Monetary Fund.



Developing-country issuers raised $62.9 billion from 436 public offerings in 2013, Maria Pinelli, vice chairwoman of strategic growth markets at Ernst & Young, said in February. Pinelli expects IPOs to reach levels last seen in 2010, when 962 share sales raised $196 billion.



"There is a desire for investors to participate in the yield opportunity that's coming from emerging-market companies," Adebayo said.


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Source: Times of Oman


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