Aramco, Alibaba Rescue Stagnant 2019 Global Equity Capital Markets

Published December 23rd, 2019 - 04:54 GMT
Aramco, Alibaba Rescue Stagnant 2019 Global Equity Capital Markets
Proceeds from global equity capital markets (ECM) fell 4.7 percent to $659 billion in 2019, according to Refinitiv data. (Shutterstock)
Giant listings by Saudi Aramco and Alibaba rescued a sluggish year for equity capital markets (ECM) after a string of shelved initial public offerings (IPOs) and share price slumps.

Proceeds from global equity capital markets (ECM) fell 4.7 percent to $659 billion in 2019, according to Refinitiv data.

This figure was propped up by state-owned oil giant Aramco’s record-breaking $25.6 billion IPO and Chinese e-commerce giant Alibaba’s $13.5 billion secondary Hong Kong listing.

The two deals accounted for six percent of the total raised, with Aramco alone accounting for 15 percent of global IPO volumes.

US office-sharing tech firm WeWork was the year’s highest-profile casualty after its valuation tumbled from $47 billion in a private fundraising round in January to as low as $10-$12 billion for its - proposed and then canceled - IPO.

Other notable cancellations included Reassure — the UK arm of reinsurance group Swiss Re — and Italian luxury yacht maker Ferretti.

The cancellations also reflected a weakening global economy and political volatility, with Asian deals suffering from the anti-government protests in Hong Kong.

The market also appears to be undergoing a structural change, with many companies, particularly tech ones, raising larger sums of money from venture capital and private equity investors, bankers said.

Private equity companies have raised record amounts of funds in recent years, while sovereign wealth funds have become increasingly active in global equity markets.

Japanese investment company Softbank alone has more than $100 billion allocated to its Vision Fund and is in the process of raising another $100 billion for a second fund.

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