Press release

20 Jul 2020 Zurich, CH

Pandemic places burden on IPO market in the second quarter of 2020 – but upwards trend in June

Zurich, 20 July 2020 – the global COVID-19 pandemic has caused a significant slowdown in activity on the international IPO markets: The volume of stock market flotations contracted by 32 percent to 41.1 billion US dollars over the second quarter of 2020 in comparison to the prior-year period, the number of IPOs falling as much as 39 percent to 186.

 

  •  Further increase in IPO activity expected in the second half of the year
  • Shorter and virtual roadshows have nevertheless facilitated placements
  • The greatest declines were seen in Europe – the Swiss stock exchange with two IPOs since the beginning of the year
  • Global volume of flotations falls by almost one third in the second quarter, number of IPOs contracts by 39 percent

The global COVID-19 pandemic has caused a significant slowdown in activity on the international IPO markets: The volume of stock market flotations contracted by 32 percent to 41.1 billion US dollars over the second quarter of 2020 in comparison to the prior-year period, the number of IPOs falling as much as 39 percent to 186. In Europe and the USA in particular there were significant declines compared to the second quarter of 2019: In the USA, the volume of flotations shrank by 45 percent to 15.1 billion US dollars, the number of IPOs fell by 38 percent to 40. In Europe, there was a decline in flotation volume of 55 percent to 6.7 billion US dollars, while the number of stock market flotations decreased by 60 percent to 22.

In contrast, the Chinese market bucked the global trend and saw another increase – as was already the case in the first quarter of this year: In China (including Hong Kong), the flotation volume rose by 55 percent to 17.9 billion US dollars, the number of IPOs increased by 28 percent to 91. This means that nearly every second stock market flotation worldwide took place in China in the second quarter of 2020. These are the findings of the current global IPO barometer compiled by audit and advisory firm EY.

“On account of the worldwide measures to contain the coronavirus, IPO activities declined in April and May, as anticipated,” says Tobias Meyer, Head Transaction Accounting and IPO Services at EY in Switzerland. “We did, however, identify clear signs of recovery in June already.” The number of stock market flotations stood at 54 in April and at a mere 43 in May. In contrast, June saw 89 companies venturing onto the trading floor – of the ten largest stock market flotations in the second quarter of 2020, eight took place in June. “The good development over the past few weeks shows that the market is very receptive and that well-prepared companies in the right sectors and with the right business models whet investor appetite despite COVID-19.” According to Tobias Mayer, investor demand is focusing on technology companies as well as pharmaceutical and biotech businesses.

Two listings on the Swiss stock exchange

Switzerland also saw the market for IPOs taking on a little more momentum again over the second quarter of 2020: June 12 is notable as the first day of trading for Ina Invest Holding Ltd.; the stock market flotation of the real estate development business of construction company Implenia as a separately-listed entity generated revenue of 116 million Swiss francs. And the first listing of V-ZUG Holding AG took place on June 25 as part of a demerger from the Metall Zug Group and a listing as a separate entity on the Swiss stock exchange under the same transaction. “The recovery of share prices, a significantly lower level of volatility and a boost in investor sentiment have contributed to a once again improving environment for IPOs over recent weeks,” adds Tobias Meyer. Stock market candidates are using digital channels to address investors and are preparing for volatile markets with shorter roadshows. There are a few companies currently on the starting blocks aiming for an IPO in the second half of 2020 or in the early part of 2021.”

The largest IPOs are currently taking place in China

The largest stock market flotation in Europe in the second quarter of 2020 was the initial listing of the Dutch coffee group JDE Peet’s, which raised 2.9 billion US dollars. The largest transaction worldwide was the IPO of Chinese online trader JD.com, which raised 3.9 billion US dollars, followed by the stock market début of NetEase, the internet group and online gaming provider likewise from China, that raised 3.1 billion US dollars.

The detailed results of the IPO Trends Report can be found in the PDF.

 

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EY’s organization is represented in Switzerland by Ernst & Young Ltd, Basel, with ten offices across Switzerland, and in Liechtenstein by Ernst & Young AG, Vaduz. In this publication, “EY” and “we” refer to Ernst & Young Ltd, Basel, a member firm of Ernst & Young Global Limited.