Reducing emerging market IPO risks

EM RISK

Paul Lyons, director in the board advisory team at consultancy firm K2 Intelligence, explains the pitfalls investors must recognise when investing in riskier initial public offerings.

Despite recent wobbles, 2014 looks to be a bumper year for initial public offering (IPO) activity. London raised £4.3bn in the first quarter of this year alone, compared with £1.6bn during the same period in 2013. Over 20% of 2014 activity so far has been generated by overseas companies, including companies from Russia, Qatar, India, and Nigeria – four countries with varying reputations for governance, and exposure to corruption. The contrast to the previous year is stark, and all the more striking given that 2012 and 2013 saw several companies from emerging economies facing high-prof...