Thursday, October 19, 2017

$34bn have been raised in IPOs worldwide since the beginning of 2017

Brexit and other growing geopolitical uncertainty has not had the predicted impact on the IPO market with figures topping their best in ten years.

Geo-political uncertainties across different continents have not had an impact in the IPO space as companies raised $33.7bn in Q1 2017, according to EY.

Across the world, 369 companies across different verticals such as technology, telecommunications, media and entertainment, real estate and financials contributed to the overall figure.

The first quarter of 2017 had a 92% year-over-year increase in the global number of IPOs and a 146% increase in global proceeds.

According to the EY quarterly report, “Global IPO Trends: Q1 2017”, Q1 2017 was the most active first quarter by global number of IPOs since Q1 2007 (with 399 IPOs raising $47.5bn).

Technology was the sector that most contributed to the proceeds value at $6.5bn, despite not having the highest number of IPOs (45). The highest number of IPOs was registered in the Industrials space at 66, with proceeds in excess of $4.1bn.

The telecommunications space was the least active, with six IPOs and money raised topping only $351m.

In regional terms, Asia-Pacific was the most active in global IPO activity in Q1 2017 led by Greater China.

The region accounted to 70% of the global number of IPOs and $16.2bn of global proceeds.

Within the region, Greater China topped the ranks with 182 IPOs with the Shenzhen and Shanghai exchanges being most active and accounting for 20% (73 IPOs) and 19% (70) of the global number of IPOs respectively.

In EMEIA, despite growing geopolitical uncertainty sparked by events such as Brexit in the UK, the IPO activity in Q1 this year increased slightly by 8.5% YOY ranking second behind Asia-Pacific.

The regions accounted for 21% and 15% of global number of IPOs and proceeds respectively.

Bolsa de Madrid, London Main and AIM, and Bombay Main Market and SME were the three most active markets by proceeds.

India and the UK were the most active regional markets with 26 and 12 IPOs respectively, followed by Saudi Arabia, which listed seven deals on its new platform, “Nomu – Parallel Market,” an alternative equity market with lighter listing requirements.

The US market follows with 24 IPOs raising $10.8bn, the region’s best performance since Q2 2015 with 72 IPOs raising $14.3bn.

EY highlights that during Q1 2017, the US accounted for four of the top ten deals globally. The NYSE led IPO proceeds globally this quarter due its hosting of the only two $1bn plus megadeals.

Dr. Martin Steinbach, EY Global and EY EMEIA IPO Leader, said: “This is a promising start to global IPO activity this year. In the face of sustained global economic uncertainty, the first quarter of this year has set the stage for accelerated growth in 2017. Economic fundamentals are improving in the major developed economies.

“Equity index performance and valuations are trending upward, with several major indices reaching all-time highs. Concurrently, volatility is low, underpinning positive IPO sentiment, which is also supported by the successful US listing of a large technology unicorn.”

“Overall, global IPO markets had the best start with the highest first quarter by global number of IPOs since 2007. The upswing is buoyed by a strong desire for investors to generate returns and the positive momentum from a strong IPO activity in the fourth quarter 2016.”

As for the rest of 2017, EY points to the reaction to geopolitical events in the financial markets being “far more positive than many had predicted”.

The company said pent-up demand for public offerings suggests global IPOs will continue to rise in 2017, with pipelines full, particularly in Asia-Pacific.

Steinbach said: “However, ongoing uncertainty continues to define the global conversation, in spite of the market rallies seen in many main market indices after respective US presidential and Brexit votes.”