- Global IPO activity continues to slow despite unicorns coming to market
- Technology, health care and industrials were the most active sectors in H1 2019
- Mega IPOs and robust IPO pipelines across all regions will bolster future activity
The trend of unicorn IPOs coming to market and pushing their proceeds to historic levels continued in Q2 2019 despite ongoing geopolitical uncertainty and trade tensions, resulting in 507 IPOs in H1 2019, raising total proceeds of US$71.9b. While deal numbers were down 28% from H1 2018, first-day returns on the main markets were up 15.4% on average and post-IPO performance increased 28.4%. Technology, health care and industrials saw the largest share of IPOs in H1 2019, together accounting for 266 IPOs (52% of global IPOs by deal numbers) and raising US$47.8b altogether (66% of global proceeds). By proceeds, technology was the strongest sector with US$29.3b raised (41% of global proceeds). These and other findings were published today in the EY quarterly report, Global IPO trends: Q2 2019.
Dr. Martin Steinbach, EY Global and EY EMEIA IPO Leader, says:
“Following the trend of increased unicorn IPO activity, Q2 2019 welcomed a number of much-anticipated, high-profile unicorns. The global IPO activity slowdown continued following an unusually quiet Q1 2019 as ongoing geopolitical tensions, trade issues among the US, China and the EU, Brexit and the outcome of European elections dampened IPO sentiment. The main way for issuers to navigate the shift from old to new realities in unpredictable markets is to remain flexible. So well-prepared companies, with the right equity story, will find their windows of opportunity. We expect higher IPO activity in the second half of 2019.”
Americas IPO markets rebound
On a quarterly basis the Americas saw 87 IPOs that raised $28.1b in Q2 2019, representing an increase of 5% by deal numbers and rise of 50% by proceeds from Q2 2018. However, YTD 2019 activity was down 14% with 118 deals, and proceeds fell by 12% to US$33.6b, compared with YTD 2018.
Despite this, the NYSE and NASDAQ ranked first and second respectively by proceeds globally in H1 2019. US exchanges accounted for 75% of Americas IPOs by number of deals (88 IPOs) and 96% by proceeds (US$32.2b) in H1 2019, driven by several high-profile technology unicorns that went public during Q2 2019.
Jackie Kelley, EY Americas IPO Leader, says:
“Finally, a wave of much-anticipated, household name unicorns entered the US IPO market, reigniting IPO activity and sparking an increase in constructive investor sentiment. The majority of IPOs delivered positive post-IPO returns in the quarter, especially high-growth companies, which sets the stage for continued momentum in IPO activity.”
Asia-Pacific IPO plans accelerated to get ahead of economic headwinds
Ongoing trade tensions between China and the US continued to impact IPO activity in YTD 2019, inhibiting a return to 2018 levels. IPO activity across the Asia-Pacific region in YTD 2019 was down 12% by volume (266 IPOs) and 27% by proceeds (US$22.3b), compared with YTD 2018.
However, Asia-Pacific continued to dominate global IPO activity YTD 2019, by volumes, representing six of the top ten exchanges. By proceeds, the region accounted for three of the top ten exchanges. Asia-Pacific’s main markets experienced average first-day returns of around 19% and average current returns of 34%, illustrating that IPO performance continues to elevate IPO investor sentiment.
Mainland China exchanges saw 27% more IPOs (33 IPOs) in Q2 2019 compared with Q2 2018, but a 38% decline in funds raised (US$5.1b) due to a lack of mega IPOs. However, Mainland China IPO activity is expected to improve during H2 2019 following the launch of the Sci-Tech innovation board (STAR Market) on the Shanghai Stock Exchange.
Japan’s IPO markets remained stable in YTD 2019, posting a slight increase in deal numbers compared with YTD 2018. There were 41 IPOs in YTD 2019 versus 39 IPOs in YTD 2018 while proceeds (US$1.3b) were notably lower than YTD 2018 (US$2.8b).
Ringo Choi, EY Asia-Pacific IPO Leader, says:
“While ongoing trade issues between the US and China continued to have an effect on investor sentiment across Asia-Pacific, the prospect of a potential economic downturn had many companies accelerating their IPO plans. As IPO candidates race to get ahead of economic headwinds, and as average post-IPO performance remains positive, we expect Asia-Pacific IPO activity levels to rise in the second half of 2019.”
EMEIA continue to proceed cautiously within persistent geopolitical uncertainties
In EMEIA, deal volumes and proceeds were down from YTD 2018 with EMEIA exchanges posting 123 IPOs (a decline of 53%) and raising a total of US$16.0b (also a decline of 48%). Despite these challenges, EMEIA accounted for five of the top ten exchanges globally by proceeds and two by deal numbers. Overall, due to strong first-day returns and YTD IPO performance and investor confidence, EMEIA IPO markets are expected to gain momentum in the second half of 2019.
Europe experienced a notable increase in IPO activity in Q2 2019, with volumes up 100% (48 deals) and proceeds up a significant 3,338% (US$12.5b) from Q1 2019.
Both domestic and cross-border activity also gathered steam in the UK in Q2 2019 as 11 companies went public, representing proceeds of US$4.5b.
“EMEIA is a region that is more dependent than others on global trade, and therefore, more sensitive to persistent geopolitical uncertainties. Given that the largest trades flows in the world are between the US as well as China with the European Union, EMEIA serves as a bellwether in determining global economic health. If the US and China can resolve their trade and tariff issues, and if the UK and the EU can agree on terms for an orderly Brexit, we can expect IPO activity to rebound in the second half of 2019. In the meantime, EMEIA IPO candidates continue to prepare so that they are ready to leap when the timing is right.”
Notes to Editors
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. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation is available via ey.com/privacy. 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, the 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. ey.com/ipo
About the data
The data presented in the Global IPO trends: Q2 2019 report and press release is from Dealogic and EY teams. Q2 2019 (i.e., January-June) and 2019 (January-June) is based on priced IPOs as of 20 June 2019 and expected IPOs in June. Data is up to 20 June 2019, 9 a.m. UK time. All data contained in this document is sourced to Dealogic, CB Insights, Crunchbase and EY unless otherwise noted.
u Ongoing global competition established to create network of students tasked to solve some of the world’s most pressing business problems
u Winners from Argentina, Germany, Singapore and the US joined EY executive leaders in New York for awards ceremony