Global IPO activity slows, despite robust capital raises in Q2 2018

"Global IPO figures for the first half of 2018 dipped by volume compared with the same period in 2017, despite higher valuations on some of the world's largest markets. The good news is that economic conditions continue to be encouraging, equity valuations are high in many parts of the world and interest rates remain low. As a result, we expect a resurgence in IPO activity during the second half of 2018."

Americas IPO momentum builds

The Americas defied market volatility to have a strong H1 2018, increasing proceeds by 31% to US$35.3b and regaining the lead in proceeds amongst regions for the first time since 2014. The NYSE and NASDAQ ranked among the top three exchanges by proceeds globally in H1 2018 and contributed heavily toward an 18% year-on-year increase in deal numbers since 2017. 

This strong momentum is largely a result of good performance, especially in the US where IPOs posted average first-day returns above 10% and share price performance post-IPO exceeded broad equity indices. US IPOs accounted for 83% of volume and 85% of proceeds on Americas exchanges in H1 2018.

Jackie Kelley, EY Americas IPO Markets Leader, says:

"The second quarter of 2018 was marked by an influx of technology IPOs entering the US market. From 2013 to 2017, we saw health care companies dominate the markets in terms of deal count, but since then we've seen technology companies slowly gaining. Deal count and proceeds raised are up compared with last year, and post-IPO share price performance is solid, creating momentum heading into the second half of the year."

Investor appetite remains high in Asia-Pacific, despite drop in IPO activity

While investor appetite for IPOs across the Asia-Pacific region remained high, H1 2018 volumes declined 37% while proceeds were down 17% compared with H1 2017. However, Asia-Pacific still accounted for a 46% share of global IPOs and 31% of global IPO proceeds in H1 2018. Five of the ten most active exchanges by deal numbers were from this region.

In particular, Japan's IPO market has continued to perform well in Q2 2018 with 21 IPOs raising $1.5b; $1.3b of this capital was generated by 11 technology IPOs in Q2 2018. Overall, Q2 2018 saw sizeable gains in both volume and proceeds, increasing 75% and 202%, respectively, over Q1 2018. The large increase in Q2 2018 meant that Japan finished H1 2018 with 5% decline in volume and an 8% increase in proceeds compared with H1 2017.

China's Shanghai (SSE) exchange hosted Q2 2018's largest IPO globally and was second among exchanges by proceeds.

Ringo Choi, EY Asia-Pacific IPO Leader, says:

"Strong macroeconomic fundamentals and investor appetite act as a counterbalance to the otherwise volatile performance of IPO activity across the region. Following the general declines in IPO performance in the first six months of 2018, largely resulting from recent interest rate increases, global political and economic uncertainties, we expect to see a rebound in the deal size of the IPOs in the second half of the year as a number of mega IPOs begin to hit the market."

EMEIA benefits from European mega deals and strong performances in India

In EMEIA, India was the top story. India's IPO market continued to thrive, having the second most active exchanges by number of IPOs globally in Q2 2018. More broadly, India's H1 2018 IPO activity was 32% and 31% higher, respectively than H1 2017 in terms of number of deals and proceeds.

Overall in EMEIA, ongoing geopolitical uncertainty and shifting trade policies has defined H1 2018 as a period of caution. Deal volumes in H1 2018 in EMEIA declined by 4%.

However, IPO pipelines and activity remain robust behind the scenes. Deal proceeds in EMEIA rose 10% in H1 2018 compared with H1 2017. Furthermore, H1 2018 was above the EMEIA 10-year median for deal numbers and proceeds.

Steinbach says:

"Rising geopolitical disruptions and trade tensions mean that EMEIA's agenda is not entirely its own. As an export-oriented region, EMEIA relies on stable relationships with its partners for trade. Despite strong economic fundamentals and strong IPO pipeline, IPO activity levels may continue to lag until investors and issuers alike feel that market conditions are more favorable."

Notes to Editors

About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.

About EY's Growth Markets Network
EY's worldwide Growth Markets Network is dedicated to serving the changing needs of high-growth companies. For more than 30 years, we've helped many of the world's most dynamic and ambitious companies grow into market leaders. Whether working with international, mid-cap companies or early stage, venture backed businesses, our professionals draw upon their extensive experience, insight and global resources to help your business succeed. ey.com/growthmarkets

About EY's Initial Public Offering Services
EY is a leader in helping companies go public worldwide. With decades of experience, our global network is dedicated to serving market leaders and helping businesses evaluate the pros and cons of an initial public offering (IPO). We demystify the process by offering IPO readiness assessments, IPO preparation, project management and execution services, all of which help prepare you for life in the public spotlight. Our Global IPO Center of Excellence is a virtual hub, which provides access to our IPO knowledge, tools, thought leadership and contacts from around the world in one easy-to-use source.
ey.com/ipo

About the data
The data presented in the Global IPO trends: Q2 2018 report and press release is from Dealogic and EY. Q2 2018 (i.e., April-June) and YTD 2018 (January-June) is based on priced IPOs as of 15 June 2018 and expected IPOs in June. Data is up to 29 May 2018, 6 a.m. UK time. All data contained in this document is sourced to Dealogic and EY unless otherwise noted.

Appendix: January 2018 to June 2018 global IPOs by sector

Peter Kelley
EY Global Media Relations
+1 424 376 7227
peter.kelley1@ey.com

Photo - https://mma.prnewswire.com/media/711658/EY.jpg

Logo - https://mma.prnewswire.com/media/708904/EY_Logo.jpg  

Related Links

http://www.ey.com