Press release

27 Mar 2020 New Delhi, IN

Capital markets likely to gain momentum post the elimination of COVID-19: EY India IPO Trends Report Q1 2020

New Delhi, 27 March 2020: India recorded 10 IPOs (US$1.41b proceeds and US$1.0m median deal size) in the first quarter of 2020 with Indian stock exchanges (BSE & NSE including SMEs) ranking eighth globally in terms of number of IPOs according to EY India IPO Trends Report: Q1 2020. Consumer products and retail was the most active sector with three IPOs launched on SME markets with approx. $1m each.

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  • India records 10 IPOs in Q1 2020 with Indian stock exchanges (BSE & NSE including SMEs) ranking eighth globally in terms of number of IPOs

New Delhi, 27 March 2020: India recorded 10 IPOs (US$1.41b proceeds and US$1.0m median deal size) in the first quarter of 2020 with Indian stock exchanges (BSE & NSE including SMEs) ranking eighth globally in terms of number of IPOs according to EY India IPO Trends Report: Q1 2020. Consumer products and retail was the most active sector with three IPOs launched on SME markets with approx. $1m each.

During Q1 2020, the IPO of SBI Cards and Payments has been India’s largest IPO in over two years, with an issue size of US$1.4b. It was subscribed over 22 times. In the main markets (NSE and BSE), there was one IPO in Q1 2020 versus five IPOs each in Q1 and Q4 2019, representing a significant drop of 80%. However, the recent amendments (72 changes in 65 sections) made to the Companies Act in March 2020, will allow Indian companies to directly list on certain foreign stock exchanges, providing easier access to deeper and diversified pools of capital, broader investor base, better valuations and in turn, boosting the India brand globally.

Sandip Khetan, Partner and National Leader, Financial Accounting Advisory Services (FAAS), EY India said, “The COVID-19 pandemic is the biggest crisis seen in decades. It continues to impact livelihoods and economies worldwide, creating uncertain times. Indian capital markets have experienced significant erosion of market capitalization and companies will take time to recover. While this may present a viable long-term investment opportunity, caution is being observed in the short-term. Sectors like life sciences, pharmaceuticals and digital are likely to revive sooner in the current economic climate.”

In the SME markets, there were 9 IPOs in Q1 2020 versus15 IPOs and 6 IPOs in Q1 2019 and Q4 2019 respectively, representing a significant drop of 40% as compared to Q1 2019 and increase of 50% over Q4 2019, respectively.

Governments, companies, investors and markets are closely monitoring the impact of COVID-19. IPO activities are likely to pick up momentum only post elimination of the said virus. Further, the steps government and regulatory authorities take to boost the economy, will be key for the revival of capital markets. 

Global findings

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, while EMEIA (35 IPOs raising US$3.5b in proceeds)

slowed by deal number. The industrials sector dominated in Q1 2020 with 45 IPOs raising US$6.3b. By deal numbers, technology (40 deals) and health care (30 deals) were also active YTD 2020.

Americas deal landscape shows continued IPO appetite

The Americas saw a 47% increase in proceeds (US$8.2b) and a 14% increase in deals (40 IPOs) compared with Q1 2019. US exchanges accounted for the majority of Americas IPO activity with 60% by deal numbers (24 IPOs) and 89% by proceeds (US$7.3b) in Q1 2020. There were seven cross-border IPOs in Q1 2020, where China was the top country of origin with six deals.

The Toronto Stock Exchange and TSX Venture Exchange saw three IPOs raising US$7m in total proceeds. Meanwhile, Brazil’s B3 market saw four IPOs raising US$785m in proceeds.

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.

Japanese exchanges also continued to flex throughout the quarter with 28 deals and US$592m in proceeds, representing a 22% increase in deals but a 21% fall in proceeds compared to Q1 2019.

Despite EMEIA deal slowdown, the region delivers in proceeds raised

Through Q1 2019 EMEIA saw 35 IPOs and US$3.5b in proceeds. While deal numbers were down 31%, proceeds skyrocketed 133% YOY. This is partly explained by India’s Financials IPO, SBI Cards & Payments Services Ltd, which raised US$1.4b in proceeds. EMEIA continued to account for three of the top ten exchanges globally by proceeds in Q1 2020; the region accounted for one of the top 10 exchanges by deal number.

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. However, while Q3 is typically a slower time of the year, there may be increased IPO activity as the market attempts a reset and the global pipeline looks for the next IPO window.

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About the data

The data presented in the Global IPO trends: Q1 2020 report and press release is from Dealogic and EY. Q1 2020 (i.e., January-March) is based on priced IPOs as of 17 March 2020 and expected IPOs in March 2020. Data is up to 18 March 2020, 9 a.m. UK time. All data contained in this document is sourced from Dealogic, CB Insights, Crunchbase and EY unless otherwise noted.

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Global ipo activity 2011 and Q1 2020
Month Number of IPOs Proceeds (US$b)
Jan-18 87 $12.3
Feb-18 108 $12.8
Mar-18 128 $23.6
     
Jan-19 57 $3.1
Feb-19 61 $3.1
Mar-19 93 $8.9
     
Jan-20 75 $9.8
Feb-20 77 $11.6
Mar-20 83 $7.1

Appendix: Q1 2020 global IPOs by sector

Sectors Number of IPOs Percentage of global IPOs Proceeds (US$b) Percentage of global capital raised
Consumer products and services 22 9.40%  $0.9  3.10%
Consumer staples 16 6.80%  $0.8  3.00%
Energy 13 5.50%  $2.7  9.60%
Financials 7 3.00%  $1.9  6.60%
Health care 30 12.80%  $5.6  19.60%
Technology 40 17.00%  $3.7  13.00%
Industrials 45 19.10%  $6.3  22.30%
Materials 21 8.90%  $1.9  6.60%
Media and entertainment 10 4.30%  $0.3  0.90%
Real estate 20 8.50%  $1.4  4.80%
Retail 10 4.30%  $3.0  10.40%

Source: Dealogic, EY

Figures may not total 100% due to rounding.