Assessed blog 1-Raising Finance via equity financing in develping countries

In this week, the main topic of lecture is the fundamental raising finance.

Jump out of lecture, the methods of raising finance include internal financing, external financing; equity financing and debt financing and direct and indirect financing. In lecture, lecturer focused on the equity financing. It is the process of raising capital through the sale of shares in an enterprise. Equity financing essentially refers to the sale of an ownership interest to raise funds for business purposes.

According to Thomson Reuter’s data, the emerging markets so far this year, the company issued $ 2.3 billion of new shares, more than five times the size of the 2013 year.

So far the main issue of new shares of Asian companies, especially in China - regulatory authorities conducted IPO reforms to ease market concerns overpriced shares.

However, this trend is likely to expand this activity to other regions, in part because the political climate is more stable. For example, after the former leader of Tunisia ousted after three years of struggle, which should allow companies to resume issuing new shares to meet investor demand for new shares.

These local, country-specific factors may help to attract global investors to return underperforming emerging markets; due to the U.S. Federal Reserve Board seems likely to end bond-buying program at the end of this year, emerging markets will face challenge.

"This year the atmosphere will be better in emerging markets there are indications that the rebound in exports, stabilize earnings and return on equity (ROE) to improve," UBS Wealth Management chief investment in emerging markets, said Jorge Mariscal.

According to Reuters data, in 2013 emerging market companies raised a total of $ 47.5 billion of new equity, slightly higher than in 2012. This is just a peak in 2007 and 2010 when the third, then raised to about $ 150 billion.

Consultancy PricewaterhouseCoopers (PwC) is expected, due to the China Securities Regulatory Commission to freeze the listing IPO floodgates opened one year after year, Chinese companies or equity issue size will reach 2,500 billion Yuan (41.38 billion U.S. dollars), is expected to hit a second record highs.

Over 50 companies have announced plans in Shanghai and Shenzhen stock exchanges, as well as hundreds of companies waiting in line. China Securities Regulatory Commission approved this year may be as many as 500 companies IPO.

In the Hong Kong market, companies expected financing $ 32.2 billion, marking the highest since 2010 and twice in 2013 the scale of financing. This year's large-scale transactions may include meat processing companies listed Shuanghui $ 5 billion in the case, as well as health and beauty products retailer Watsons, e-commerce giant Alibaba Group traded.

IPO boom is also driven by new markets in Africa, the region's former private equity firm place, for there was a lack of liquidity and transparency.

If indeed the African market investments open to the public, you might attract large institutional investors. These investors sought a market in passive index, rather than the income may be higher but too labour-intensive private transactions.

"There needs to be IPO financing of companies and markets want this preference. Where can I see these two elements? Most interesting places in Africa," Renaissance Capital said Charles Robertson, chief analyst.

Because of the advantages of share issued, which are no obligation to poay dividends and the capital does not have to repaid, many emerging market companies are stepping into the stock market financing.