London still tops for Oil IPOs

Date: 26-03-2008
Source: Financial Times

London continued to dominate fund-raising for international oil and gas companies in 2007, though the market shrank considerably as credit conditions worsened, according to figures from accountancy & consultancy firm Ernst & Young.

Fourteen initial public offerings raised Dollars 2.1bn (Pounds 1.1bn) in London last year, nearly all of it from non-UK companies and representing about one-sixth of the Dollars 12.4bn global market. Furthermore, the number of London-based initial public offerings was steady at 14, compared with a decline from 90 to 85 globally.

Aim was once again the preferred vehicle for fund-raising, accounting for 12 deals worth Dollars 579m. But the biggest deals - two Russian companies raised over Dollars 700m - were still carried out on the London Stock Exchange.

Aim attracted the bulk of all IPOs conducted by companies raising finances outside their home country, with only Toronto providing serious competition. Companies listing in London came from far and wide, including Madagascar, Malaysia and Peru. However, Chinese oil and gas firms preferred to list in Singapore and New York.

John Savage of Ernst & Young said: "This can be attributed to the more favourable regulatory environment in London and a capital market that understands and has enthusiasm for the sector." He added that a London listing made smaller oil and gas companies attractive to industry predators, keen to bolster their reserves amid high prices and increasingly difficult to exploit natural resources.