By Kylie MacLellan, Olivia Oran and Elzio Barreto
LONDON/NEW YORK/HONG KONG (Reuters) - This year has been the biggest for equity fundraising globally since 2010, thanks to improving confidence among companies on the back of the strong investor demand for stocks, according to Thomson Reuters data published on Friday.
A total of $774 billion has been raised worldwide from equity capital market (ECM) offerings as of December 18, including flotations, issues of bonds which are convertible into stock, and secondary share offers by already-listed companies, a rise of 24 percent on 2012.
Companies globally raised $159.7 billion from initial public offerings (IPOs), a 37 percent increase on 2012 and bankers expect 2014 to carry on where 2013 left off, with many companies bringing forward plans to go public as they look to take advantage of the strong market conditions and low levels of stock market volatility.
"It's the perfect storm for the IPO product," said Evan Damast, global head of equity syndicate at Morgan Stanley, saying increasing confidence in global growth and company earnings as well as investors seeking to boost the proportion of equities in their portfolios were supporting the market.
"These factors, in addition to positive deal performance, are encouraging investors to spend more time analyzing and investing in new issue opportunities."
At the same time private equity firms , encouraged by soaring stock markets to seek exits for their investments proved a big driver of IPOs in both the United States and Europe. In London, Blackstone Group and CVC floated amusement parks operator Merlin Entertainments while Blackstone also listed hotel operator Hilton Worldwide Holdings in New York.
Large floats such as Hilton and Plains GP Holdings helped lift the volume of U.S. IPOs by 22 percent to $49.3 billion, making it the strongest year by proceeds since 2000. Technology companies like Twitter were also among those who completed high-profile public offerings in 2013.
According to the data Goldman Sachs was the top-ranked bank this year, having worked on more than $90 billion worth of deals, almost $26 billion ahead of second place JP Morgan.
"The great thing about the IPO market in 2013 was that it was reasonably broad-based in terms of investor interest in different sectors, company business models, stage-of-company development and so forth," said Matthew Sperling, head of equity advisory for North America at Rothschild.
And bankers expect companies to push ahead through a normally quieter January to make the most of strong market conditions.
"There's a tremendous amount of pitching activity going on so there will be some things that come in the first quarter," said Joseph Castle, Barclays' global head of equity syndicate.
Large U.S. deals next year are expected to come from a variety of sectors including industrial and financial institutions, including Chrysler Group LLC, Banco Santander SA's U.S. consumer lender and General Motors' former financial services affiliate Ally Financial.
In the technology sector, high profile floats could include Chinese Internet company Alibaba and payments company Square.
EUROPE TURNS A CORNER
In Europe, where the volume of new stock market listings more than doubled this year to $34.9 billion, bankers said the return of U.S.-based investors was a big supporter of deals.
"The general view on the part of investors is that Europe has turned a corner and is perceived as undervalued ... there are opportunities here," said Craig Coben, head of Europe, Middle East and Africa ECM at Bank of America Merrill Lynch.
New money flowing into equity funds have been key, said Coben, as without them investors don't buy IPOs, or demand deep discounts as they have to sell an existing holding to buy the new stock.
Privatizations, including Polish power company Energa and British postal service Royal Mail, were a major source of activity, with governments expected to continue to take advantage of strong markets to privatize their holdings, particularly in banks bailed out during the financial crisis.
Britain began selling its stake in Lloyds Bank in September and is likely to offload more shares in early 2014.
"If markets continue on their current path we may see more and more privatizations, including the unwinding of government positions in some of their listed holdings," said Edward Sankey, global co-head of equity syndicate and co-head of EMEA ECM at Deutsche Bank.
European deals have been dominated by UK firms, which made up nearly a quarter of ECM proceeds, and over a third of IPOs.
While a string of UK retail and consumer companies, including Poundland and Pets at Home, are set to go public next year on the back of improving economic growth, advisors expect a broader range of activity in Europe in 2014.
Investors are looking at southern Europe again, bankers said, with several Spanish IPOs in the works including industrial testing firm Applus+.
CHINA IPOS TO RESUME AFTER FREEZE
In contrast to other regions, equity issuance in Asia Pacific ex-Japan shrank for a third straight year in 2013, down 1.4 percent to $168.7 billion.
However, IPO proceeds rose 7.4 percent to $41.5 billion as a surge in deals in Australia, New Zealand and Hong Kong helped offset weaker markets in Malaysia and South Korea and a freeze on new listings in mainland China.
Bankers and analysts predict a bumper 2014, with large deals in Hong Kong putting it centre stage for IPOs again. Among those expected are a $6 billion deal from Chinese meat processor Shuanghui International Holdings and a multi-billion dollar float from health and beauty retailer A.S. Watson.
The resumption of IPOs in Shanghai and Shenzhen next month should also provide a much needed boost to deal volumes in the region, after the absence of new issues for more than a year in China.
"When they re-open, there will be a boom," said Ringo Choi, Asia Pacific IPO leader at consultancy firm EY in Hong Kong.
Next year should also see a surge in IPOs of Chinese firms in the United States, benefitting from the strong performance of listings in 2013 including Autohome Inc and 500.com. Bankers and analysts estimate the number of floats could exceed 20, from eight in 2013 and just three in 2012.
"The overall trend is an improving one," said a report by EY on the global outlook for IPOs. "The market window looks its best in several quarters for the start of 2014."
(Editing by Greg Mahlich)