My colleague Jackie Kelley, EY Americas IPO Markets Leader, summarises these trends:
“Americas IPO activity remains strong, with both deal volume and proceeds increasing year-to-date. Investor confidence remains solid in the US, with momentum largely the result of post-IPO price performance, which keeps investors engaged and draws more issuers to the market. As we prepare for November's mid-term elections and the prolific discussions around tax reform 2.0 continue, we may see a tempered US market as we wrap up 2018. However, the steady stream of PE- and VC-backed IPOs in recent months could indicate an influx of unicorn companies coming to market as we head into 2019.”
Asia-Pacific benefits from Hong Kong mega deals
In Asia-Pacific, Hong Kong was the leading story despite cooling activity in the region. Hong Kong’s IPO market experienced sharp spikes in Q3 2018 by both deal number and proceeds, with 18% of IPOs and 49% of global proceeds in Q3 2018. Three mega IPOs (of which two were unicorns) set a record for monthly IPO listings in July, making it this quarter’s most active stock exchange globally. Hong Kong was also the world’s second most popular destination for cross-border IPOs, behind only the US.
Japan continued to perform well in Q3 2018, posting 28 IPOs which is a marked increase from the 17 IPOs seen in Q3 2017. Year-to-date, Japan IPO volumes and proceeds were up 14% and 36% over the same time period in 2017.
Overall in Asia-Pacific, investor appetite for IPOs was sustained, with YTD 2018 proceeds up 16% on YTD 2017 despite IPO volumes falling 31%. Five of the ten most active exchanges by deal numbers and by proceeds in YTD 2018 were from the Asia-Pacific region.
Ringo Choi, EY Asia-Pacific IPO Leader, says:
"In a normally quiet quarter, Asia-Pacific experienced some exciting IPO activity and we saw the positive impact of new listing regulations on the Hong Kong IPO market. However IPO activity was also negatively impacted by interest rate hikes and investors looking for interest rate-driven investments, a trend which could continue in 2019. With the launch of a handful of unicorn IPOs on Asia-Pacific exchanges in Q3 2018, we have seen unicorn companies graduate from a state of infancy to one of maturity. As some companies choose to accelerate their IPO timeline to take advantage of current valuations we are likely to see unicorn and mega IPOs pushing 2018 IPO proceeds above 2017’s levels."