- Despite COVID-19 concerns, Q1 deals and proceeds rose year-over-year
- Industrials sector dominates with 45 IPOs raising US$6.3b YTD 2020
- IPO landscape will likely remain sluggish through Q2, looking to rebound in H2
Despite initially riding momentum carried from Q4 2019, hopes for an IPO window of opportunity and rebound in the first half of 2020 were cut short by the global impact of COVID-19. This led to 235 deals and US$28.5b in proceeds through the first three months of 2020 . Despite the equity markets not being as bullish as expected, IPOs in Q1 2020 performed better than Q1 2019, seeing 11% and 89% increases in the number of deals and proceeds respectively, albeit from a relatively low base in 2019.
The quarter represented two extremes: an active January and February ending in a close-to-standstill March. Asia-Pacific (160 deals raising US$16.8b in proceeds) and the Americas (40 IPOs raising US$8.2b in proceeds) ended Q1 2020 ahead compared with Q1 2019 by both deal number and proceeds. These and other findings were published in the EY quarterly report, Global IPO trends: Q1 2020.
“Riding the strong tailwinds from Q4 2019, the global IPO markets started off strongly in the first two months of 2020. However, the unexpected and novel events surrounding COVID-19 took a toll on the global health of equity markets and, together with other global market factors, have caused market turbulence last seen only during the global financial crisis of 2008. This extreme market volatility makes any ambitions to go public highly uncertain, both in terms of timing and valuation” , says Marc Guns, partner at EY.
Asia-Pacific IPO markets maintain strong start
Asia-Pacific prevailed with 160 IPOs and US$16.8b in proceeds in Q1 2020, a 28% and 110% increase compared with Q1 2019, respectively, and these accounted for 68% of the global deal numbers and 59% by proceeds.
In Greater China, IPO activity in Hong Kong was more negatively impacted than within the Mainland China exchanges. Combined, Greater China deal numbers increased 34% (90 deals) while proceeds increased by 104% (US$13.2b) compared to Q1 2019.
2020 outlook: the chilling effect will impact markets for foreseeable future
Given the COVID-19 outbreak and its negative impact on global economic activities, IPO markets are not expected to quickly rebound in Q2 2020.