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Big Deals (November 5) Print E-mail

Investors scooping up EM debt, private equity is surging, and much more.

By Marine Cole

The interest in emerging market debt has been growing over the last few years and it doesn’t seem to be abating.

Emerging market countries saw three debt offerings this week from Kazakhstan, Brazil and China, bolstering year-to-date volume to $238 billion, only $10 billion shy of the all-time full-year record, which was set last year with total proceeds of $248.7 billion, according to data provided by Thomson Reuters.

This year has set the record for the highest average proceeds for emerging market debt, with average deal size of $266.5 million per offering, up from an average of $242.4 million in 2009.

More than half of emerging market debt has been issued in US dollars this year, with total proceeds of $147.3 billion, followed far behind by Indian Rupees and Euros with total $37.4 billion and $13.1 billion respectively.

Meanwhile, management buyouts are few and far between. The recently-announced $5.1 billion MBO of Exco Resources by chief executive Douglas Miller ranks as the largest of such transactions since the $6.4 billion acquisition of Actavis Group in May 2007. Exco Resources chief executive teamed up with the billionaire oilman T. Boone Pickens and two private investment firms to make the takeover bid for the natural gas producer.

Globally, MBOS total $9.6 billion so far this year, more than triple the total during the same period in 2009, which saw total value of $2.6 billion. But this year has seen only 289 MBO deals, the lowest number of deals since the same period in 1987, which saw 189 total transactions.

This latest Exco transaction brings the energy and power industry to the top spot for MBOs and accounts for 59 percent of total activity this year. This is followed by consumer staples and healthcare, which are the second and third largest industries for MBOs with 13 percent and 6 percent respectively of global activity.

Still in the mergers and acquisitions world, private equity continues to bounce back. HSBC said Thursday it agreed to sell a rail car company, the Eversholt Rail Group, to a private equity consortium led by the buyout firm 3i and including Morgan Stanley and Star Capital Partners for $3.3 billion. The deal is expected to close by year-end.

Transactions in hot sectors like technology also continue to abound. Oracle agreed to buy e-commerce software provider the Art Technology Group for about $1 billion.

In the equity capital markets, this week’s $3.1 billion initial public offering from Italy’s Enel Green Power is the largest IPO in Europe since the April 2009 offering from Russian scientific research company NPO Fizika, which raised $8.3 billion.

The volume of European IPOs now totals $31.9 billion this year, outpacing offerings in the Americas, which totaled $24.7 billion, but still behind Asia’s record pace of $131.5 billion for the year. IPO issuance in Europe has seen the highest year-to-date figure since the same period in 2007, which saw total offerings of $91.4 billion. Italy currently ranks as the fourth largest country in Europe for IPO issuance behind the UK, Poland and Russia.

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