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The global IPO market forged ahead in the second quarter of 2011, making it the second most active quarter of global issuance since 2007. Global IPOs in North American and Europe in particular showed surprising perseverance in the face of broader market volatility, with combined deal flow surging more than 60% year-over-year. Though volume trends showed continued strength, global performance was anemic as macroeconomic concerns stemming from the debt crisis in Greece, tsunami in Japan and rising inflation in China roiled stock markets, diminishing investor risk appetite. As these fears subside, we expect substantial improvements in both issuance and performance during the second half of the year.

A total of 124 global companies went public in 2Q 2011, an 11% increase from the 112 IPOs completed in the prior year period. Although the increase in issuance was moderate, proceeds jumped 46% to $56 billion, bolstered by Swiss commodity trader Glencore's $10 billion London/Hong Kong dual listing, which stands as the largest global IPO year-to-date. Excluding China A Share offerings, which are not accessible to investors outside of China, 91 global IPOs raised $49 billion, representing a 69% increase in deals and an 88% increase in proceeds year-over-year.

Though global IPO volume continued to show strength, renewed macroeconomic fears weighed on performance. More than half of the 124 global deals were trading below their respective offer prices by quarter end, with a total average return of 1%.

In the U.S. IPO market, both deal flow and proceeds rose sharply from the year-ago period. There were 46 IPOs in the 2Q11, a 24% increase year-over-year. These 46 deals raised $12 billion in proceeds, a 151% jump year-over-year. On a sequential basis, the number of issues also increased but proceeds fell, indicating a drop in average deal size ($268 million vs. $418 million in the 1Q11). Though private equity-backed companies remained active with 10 IPOs, in line with first quarter levels, smaller individual PE transactions contributed to this trend. For example, Yandex (NASDAQ:YNDX), backed by Russian private equity firm Baring Vostok, was the quarter's largest U.S. IPO but raised only $1.3 billion, roughly a third the size of HCA's (NYSE:HCA) $3.8 billion IPO in 1Q11.

U.S. performance pulled back in the second quarter with the average U.S. IPO climbing 8%, a moderate decrease from the 13% returned in 1Q11 and a significant drop from the 22% average return in the year-ago period. By the end of the quarter, 43% of U.S. IPOs were trading below their listing prices.

Though the macroeconomic picture will likely remain clouded as China grapples with inflation and Greece's austerity policies are put to the test, we believe investors' underlying enthusiasm for fresh product will drive both issuance and performance during the second half. With high-profile names such as Zynga, Groupon and LivingSocial, old-line companies including Dunkin' Brands and Toys "R" Us and global leaders such as Bankia, New China Life and Repsol Brasil all preparing to go public, the global IPO market is on track to see a resurgence in activity in the coming months.