Standard Life is world's fourth biggest IPO

STANDARD Life helped propel Britain to third in the world flotations league this year - behind China and Russia - as global initial public offerings soared to a record high.

Figures released jointly by Ernst & Young, Dealogic and Thomson Financial show that from January to November 2006, $227 billion (116.2bn) was raised in 1,559 IPOs - a 36 per cent jump on the $167bn raised in the whole of 2005. In October and November alone deals to the value of $76bn were recorded internationally - more than 50 per cent higher than the total value of all IPOs in 2003.

Britain raised $18.6bn in domestic capital in 2006, an increase of 151 per cent compared with 2005, when $7.4bn was raised. The number of deals increased by 20 per cent, with 142 issuances in 2006 compared with 118 in 2005.

The largest domestic IPO in 2006 was Standard Life's in July, raising proceeds of more than $4.4bn, followed by Debenhams', raising $1.9bn. Standard's was the world's fourth largest IPO this year, after Industrial and Commercial Bank of China (ICBC), Bank of China, in which Royal Bank of Scotland took a $1bn stake, and the Russian energy company Rosneft, which listed in London.

The City continued to be popular as a hub for foreign transaction activity too, impacting both the main exchange and the Alternative Investment Market. Money raised in London by overseas companies increased by 69 per cent from $13bn in 2005 to $22bn in 2006.

Rosneft was the largest of the 71 overseas listings, raising more than $10bn. By contrast, the amount of money raised and the number of foreign IPOs have declined in the US - from 28 listings worth $8bn in 2004 to 26 worth $6bn in 2006.

David Wilkinson, IPO leader at Ernst & Young UK, said the market was seeing the continued globalisation of the capital markets with more companies, investors and exchanges looking worldwide for growth opportunities.

The impact of overseas listings, especially, has been significant for the London exchanges, and is clearly reflected in recent takeover interest in the London Stock Exchange, the latest being a hostile 2.7bn bid from the US's Nasdaq, which has a near-29 per cent stake in the LSE.

With 11 per cent of the total IPOs in 2006, AIM is the global leader for the number of deals. The main market comes second only to Hong Kong in the value of capital raised, with 15 per cent of the global total.

"The London markets are proving extremely attractive for foreign investors for a number of reasons," said Wilkinson yesterday. "Undoubtedly a desire to move outside of the Sarbanes Oxley corporate governance provisions is part of the mix. But just as important is the fact that a wide range of companies, including small and mid-cap, can attract institutional investment in London."

Europe as a whole rebounded strongly, with $73.3bn in capital raised, an increase of 40 per cent on 2005. Russia was second behind the UK with 17 deals raising a record $17.6bn.

And if 2006 saw a bullish UK IPO market, the fact that a number of companies also prepared for flotation without actually listing bodes well for 2007.

"There is still a pool of good quality, rather than immature companies, waiting to come to market that have the characteristics that investors are looking for," Wilkinson said.

"These are companies with strong management teams and good profitability and growth prospects."

As in 2005, the increase in capital raised was led by large deals. This year's ICBC listing in China was the biggest ever IPO, raising almost $22bn alone.