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Strong IPO outlook worldwide as 29 countries surpass $1 billion mark, says Ernst & Young

Exchanges increasingly specialize to meet diverse issuer needs

london, Moscow, 30 March 2006 . — No fewer than 29 countries – including Russia, Brazil, Egypt, Greece, India, Israel, Kazakhstan, Malaysia, Poland, Saudi Arabia, South Korea and the UAE – each hosted more than $1 billion worth of IPOs last year, marking a globalization trend set to continue through 2006, according to Accelerating Growth, the third annual Global IPO Report released today by leading professional services provider Ernst & Young.

IPO activity continues to reflect the shifting landscape of the world economy with a significant increase in the emerging markets. While a key trend in 2005 was an increase in IPOs in China, Israel, Russia, and Poland, the outlook for 2006 shows an increased interest in markets including the Middle East, South Korea, India and Brazil.

“For many large investors, a global strategy that does not include China, India, and Russia has become a contradiction in terms,"Gregory K. Ericksen, Global Vice Chair of Strategic Growth Markets at Ernst & Young, said. "However, the landscape is continuing to widen and we now see a healthy pipeline of IPO candidates waiting in the wings in markets around the world. A wide global spread of IPO activity, a mix of types of offering, energetic growth in emerging markets, and vigorous competition for new business by the world’s stock exchanges all bode well for the IPO supply in 2006."

"The boom in Russian IPOs has already started, and we expect this trend to continue for many years,"said Paul Murphy, partner at Ernst & Young, head of IPO Transaction Support services in Russia and the CIS. "We see a strong interest from foreign and local investors in Russia and CIS companies. The demand is driven by many factors which include significant consumer market opportunities in this part of the world, the risk reward equation relative to Europe, opportunities in the natural resources sector and portfolio balancing with exposure to emerging markets. The most significant development recently is the emergence of non natural resource businesses sourcing IPO funds to grow and develop their businesses.”

The report, combining data from Ernst & Young and Thomson Financial with the views of representatives from stock exchanges and banks around the world, reveals that issuers have increasingly diverse strategies and needs, and stock exchanges are specializing to differentiate themselves and meet them.

“Part of the rich IPO environment is diverse stock market and regulatory regimes, with the established highly regulated markets of the US, Western Europe, and Japan at one extreme and infant exchanges in some emerging markets at the other,"Ericksen said. "Today’s IPO model has developed a number of variants – there is no longer just one game to play. Several factors are playing a part here, all consistent with the increasing sophistication and maturity of investors and capital markets generally.”

Highlights of the survey include:

• The emerging markets of Russia and Eastern Europe accounted for a large portion of IPO activity in 2005. $4.9 billion was raised by Russian companies in 11 IPOs last year, more than four times the 2004 figure, and $1.5 billion was raised by Polish companies in 27 IPOs. These are significant figures and reflect general economic development in Eastern Europe and growing investor confidence in standards of governance and political stability.



• 2005 was a watershed year for IPO activity in the Middle East and Africa: soaring liquidity from oil revenues contributed to many big ticket IPOs raising more than $500 million each in the United Arab Emirates (UAE), Saudi Arabia, Oman, Lebanon and Egypt. The UAE alone saw issues worth $1.9 billion compared to just $0.5 billion in 2004.



• Asia continues to be a hotbed of activity. Towed along by mainland China and Hong Kong’s continuing strength, other economies in the area displayed vigorous IPO activity, notably Malaysia, Taiwan, South Korea, and India. One of the three biggest deals to date this year was Lotte, the South Korean Department Store, which raised $3.5 billion when it dual-listed in London and Seoul.



• In Latin America, Brazil saw an increase in both the amount of capital raised – up 48% to $1.8 billion, and the number of transactions – up 20% on the previous year. Brazilian companies currently account for one-third of all Latin American listings on the New York Stock Exchange.

About Ernst & Young

Ernst & Young, a global leader in professional services, is committed to restoring the public’s trust in professional services firms and in the quality of financial reporting. Its 107,000 people in 140 countries pursue the highest levels of integrity, quality, and professionalism in providing a range of sophisticated services centered on our core competencies of auditing, accounting, tax, and transactions. We have expanded our services and resources to help meet the needs of our clients throughout the CIS: in Moscow, St. Petersburg, Novosibirsk, Yuzhno-Sakhalinsk, Ekaterinburg, Almaty, Astana, Atyrau, Baku, Kyiv, Tashkent, Tbilisi, and Minsk. Over 2,000 professionals staff our thirteen CIS offices. For more information, please refer to www.ey.com/cis.