5 minute read 11 Dec 2018
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Big vs. agile: what happened in the global IPO market in Q4 2018


Martin Steinbach


Over 20 years of experience in the corporate finance field: IPO, M&A, private equity, venture capital and mezzanine finance. IPO thought leader.

5 minute read 11 Dec 2018

Megadeals and unicorn IPOs characterized the 2018 deal landscape, a trend that is expected to continue into 2019.

Global IPO proceeds rose in 2018, supported by investor confidence, large pools of liquidity, strong valuations and low interest rates. Year-to-date, 2018 has registered 1,359 IPOs with US$204.8b – a 6% increase on proceeds despite a 21% decline in volumes.

You can download our quarterly IPO trends report here.

The rise of unicorn-related IPO activity and mega IPOs were key factors in helping to push 2018 proceeds beyond 2017 levels. This trend is expected to continue into 2019, with the backlog of IPO candidates increasing and capital becoming more widely available.

The technology, industrials and health care sectors were the most prolific sectors by deal numbers in 2018, together accounting for 652 IPOs and raising US$84.2b in total.

Activity in Q4 2018 was 34% lower in deal volume and 10% lower by proceeds compared with Q4 2017.

Market volatility and continued geopolitical uncertainties were contributing factors in a strong decline in quarter-over-quarter IPO activity in all regions during Q4 2018, signalling what is set to be a cautious start to 2019. 

While the fourth quarter was weak, the year ended as expected, with 2018 activity held back toward the end of the year by geopolitical tensions, trade tensions among the US, China and EU, and the looming exit of the UK from the EU.

Americas IPO momentum sustained in 2018

With 261 IPOs raising US$60b, deal volumes and proceeds of Americas IPO markets in 2018 exceeded 2017 numbers by 14% and 16%, respectively.

Twenty-nine percent of US exchange IPOs were cross-border, with 60 companies from 15 countries choosing to list in the US during 2018, an increase from 24% in 2017.

Canada’s Toronto Stock Exchange and Venture Exchange saw 17 IPOs, which raised US$1.1b, accounting for 7% of Americas IPOs and 2% by proceeds, while 26 unicorn companies (raising a total of US$15.0b) came to the US public markets in 2018.

My colleague Jackie Kelley, EY Americas IPO Markets Leader, summarizes these trends: “Despite muted IPO activity in Central and South America exchanges in the second half of 2018, the IPO pipeline continues to build in the Americas. The US IPO markets remain strong, with both volume and proceeds surpassing 2017 levels. A number of unicorn companies brought IPOs to market in 2018, with more on record stating that they will be conducting IPOs in 2019. As we head into the new year, we expect IPO volumes to remain steady, with greater activity concentrated in the first half of the year.”

Asia-Pacific benefits from megadeals across the region

Asia-Pacific continued to dominate global IPO activity, accounting for six of the top ten exchanges globally by deal number and five of the top ten exchanges by proceeds. However, 2018 deal volumes (666 deals) were down by 31% versus 2017, while proceeds (US$97.1b) were up by 28% due to a number of mega IPOs in the region.

Japan posted 97 IPOs in 2018, a modest 2% increase in terms of volume compared to 2017, but representing a significant 333% increase over 2017 proceeds. This gain can be attributed to the US$21.1b listing of telecommunications giant SoftBank Corp. on the Tokyo Stock Exchange in mid-December – representing one of Japan’s largest ever IPO – and also the listing of Japan’s first two unicorn IPOs.  

New listing rules on weighted voting rights and pre-revenue biotech companies attracted high-profile technology and biotech companies to list in Hong Kong, with Hong Kong’s Main Market and Growth Enterprise Market seeing a rise of 24% by deal number (197 deals) and 120% by proceeds (US$35.4b) in 2018 compared with 2017.

Ringo Choi, EY Asia-Pacific IPO Leader, says: “Despite a slowdown in Q4 2018 quarter-on-quarter, Asia-Pacific IPO markets continue to be a beacon across the global IPO landscape. However, as we head into 2019, the Asia-Pacific IPO market has reached a crossroads. If fundamental factors improve, such as greater geopolitical certainty, better trade relations or an increase in liquidity, we may see improvements in IPO activity as early as Q1 2019. However, if the fundamentals remain as they are, we may see a short burst of activity in Q1 2019, but sustained improvement in IPO activity may not be realized until the second half of the year.”

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EMEIA increased global IPO market share

In EMEIA, deal volumes (432) and proceeds (US$47.7b) were down in 2018. EMEIA’s 2018 IPO activity was 16% and 26% lower, respectively, than 2017 in terms of number of deals and proceeds, with geopolitical tensions having a clear impact on IPO activity.

Despite this, EMEIA exchanges remained strong as the world’s second largest IPO market providing two of the global top 5 megadeals in 2018, and contributing 4 unicorn IPOs (which raised US$2.7b).

EMEIA increased global IPO market share with 32% of global deal numbers and 23% by proceeds in 2018. Moreover, EMEIA accounted for three of the top ten exchanges by proceeds (Germany, UK and India) and two by volume (India and NASDAQ OMX).

IPOs that launched in 2018 posted first-day returns of nearly 10% and have outperformed most main market indices in 2018, solidifying investor confidence in the EMEIA IPO market.

While the flow of IPO activity may remain slower in Q1 2019, with strong economic fundamentals and the backing of investors, we expect EMEIA IPO markets will remain a dominant.

2019 outlook: a cautious start will lift in second half of the year

Looking ahead, a number of uncertainties are likely to prevail in 2019. Trade tensions between the US, China and the EU; the outcome of Brexit as well as the uncertainty with respect to the stability of a number of European economies, are set to continue and ultimately determine overall IPO sentiment. At the same time, with interest rates expected to rise in the US, the European Central Bank may in time feel the pressure to follow suit, which will also influence IPO activity in the quarters to come.

While 2019 IPO deal numbers could be below those recorded in 2018, it is likely that global proceeds could meet or exceed high 2018 levels, particularly if a greater number of unicorn companies and more companies from the technology, industrials, consumer products and health care sectors come to the public capital markets in 2019 as expected. Cross-border activity is expected to maintain its momentum well into 2019, with the US, Hong Kong and London continuing to be the top destinations for IPO activity.


Despite market volatility and continued geopolitical uncertainties, global IPO proceeds rose in 2018, led by mega IPOs and the rise of unicorn-related IPO activity. You can download our quarterly IPO trends report here.


About this article


Martin Steinbach


Over 20 years of experience in the corporate finance field: IPO, M&A, private equity, venture capital and mezzanine finance. IPO thought leader.