- India records 19 IPOs in the fourth quarter with Indian stock exchanges (BSE and NSE including SMEs) ranking ninth globally in 2020
New Delhi, 24 January 2021: India recorded 19 IPOs (US$1836.22m) in the fourth quarter of 2020 with Indian stock exchanges (BSE and NSE including SMEs) versus11 IPOs at this time last year. India ranks ninth globally in terms of the number of IPOs in 2020 with 43 IPOs raising US$4095.99m according to EY India IPO Trends Report: Q4 2020.
During Q4 2020, IPO by Gland Pharma Limited from the life sciences sector was the largest, with an issue size of US$869m. In the main markets (BSE and NSE), there were 10 IPOs in Q4 2020 versus five IPOs in Q4 2019 and four IPOs in Q3 2020, representing an increase of 100% compared to Q4 2019 and an increase of 150% compared to Q3 2020. Real estate, (RE), hospitality and construction and diversified industrial products were the most active sectors (in terms of the number of IPOs) with three IPOs launched in each sector (including main and SME markets).
In the SME markets, there were nine IPOs in Q4 2020 versus six and four IPOs in Q4 2019 and Q3 2020, respectively, representing an increase of 50% as compared to Q4 2019 and increase of 125% as compared to Q3 2020.
Sandip Khetan, Partner and National Leader, Financial Accounting Advisory Services (FAAS), EY India said, “There is a strong momentum in the IPO markets, and we are seeing an increased interest from companies across sectors looking to raise capital in the near term. Additionally, companies are keenly awaiting guidelines for direct listing in overseas markets. The market sentiment remains positive for what could be a stellar 2021.”
The Securities and Exchange Board of India (SEBI) rolled out several measures amid the pandemic, providing many temporary relaxations, the validity for which has been further extended. There is also an ongoing discussion by SEBI for changing the minimum offer for large issuers and related compliances. In addition, SEBI proposes to bring greater transparency through additional Environmental, Social and Governance (ESG) disclosures to identify and assess sustainability-related risks and opportunities.
Exuberance in the market has resulted in several companies including e-commerce and emerging technologies to accelerate their IPO plans. In addition, GIFT City (Gujarat International Finance Tec-City) which offers trading in equities, currencies, and commodities, as well as listing of international bonds might emerge as a key platform for Indian businesses in global markets. Significant measures may be announced in the upcoming Union Budget 2021 that might boost demand, setting a positive tone for the Indian IPO markets.
Despite the uncertainty of 2020, IPO investors enjoyed a prosperous year as IPO activity proved resilient to the impact of the COVID-19 pandemic supported by low interest rates and expansionary monetary policies. Global IPO volumes continued to accelerate, increasing by 19% to 1,363, while proceeds increased 29% year-on-year to a total of US$268b. This strong IPO performance indicates global equity markets continue to provide the platform for companies with access to public capital.
The Americas IPO market adapted for resilience in 2020
Americas IPO momentum remained positive in Q4 2020, finishing the year with 282 IPOs raising US$97.9b, a respective increase of 30% and 78% year-on-year. The health care sector remained strong with 40% of total deals taking place in the region, seeing 114 IPOs raise US$27.9b during 2020. The technology sector followed with 77 IPOs raising US$40.4b and industrials, which saw 19 IPOs raise US$8.0b in 2020.
US exchanges continued to flourish, accounting for 79% (224) of the region’s IPOs in 2020 and 88% (US$86.2b) by proceeds. 2020 was also the most active year for Brazil by deal numbers (28) and proceeds (US$8.5b) since 2007 as low interest rates led investors to the market. While the US exchanges remained agile, special purpose acquisition companies (SPACs) continue to emerge as a more mainstream path to the public markets for companies due to their speed and deal certainty.
Asia-Pacific markets remain strong in face of COVID-19 pandemic
Despite a challenging year, 2020 activity in the Asia-Pacific region surpassed 2019, increasing 20% (822) by volume and 45% (US$136.2b) by proceeds in 2020. In fact, the region saw the highest proceeds since 2010. Industrials led the sectors with 181 IPOs raising US$20.8b in proceeds, followed by technology with 180 IPOs and US$38.7b in proceeds, and materials, which saw 95 IPOs raising US$7.4b.
Greater China accounted for three of the top five exchanges globally. With investor sentiment remaining positive in Q4 2020, Greater China saw an acceleration in both IPO volumes and proceeds, garnering US$119.1b via 536 IPOs in total.
Japan’s startup ecosystem continued to drive growth as well in Q4 2020, seeing a modest 4% (93) increase in IPOs and 13% (US$3.3b) decline in proceeds through 2020.
EMEIA’s IPO candidates took advantage of the open window of opportunity
EMEIA gained momentum in Q4 2020 despite the second wave of the COVID-19 pandemic sweeping through the region. Through 2020, EMEIA saw 259 IPOs raise US$33.9b in proceeds, a 7% rise and 43% decline respectively.
In Europe, the market continued to pick up speed with 2020 total deal numbers increasing 23% and proceeds rising 9% year-on-year. The UK IPO market maintained its Q3 momentum with two mega IPOs in Q4, resulting in a 30% increase by deal numbers and 56% increase by proceeds year-on-year.
Q1 2021 outlook: markets should sustain momentum
As COVID-19 vaccine availability keeps spirits high and companies take advantage of ample liquidity, global IPO markets should remain healthy and will likely sustain momentum going into H1 2021. From a geopolitical perspective, the agreed Brexit deal favors positive IPO market sentiments as agreements between the EU and the UK continue to take shape. While the window of opportunity remains open, IPO candidates should remain vigilant for proposed regulatory changes, a potential market correction stemming from increases in pricing volatility and the pace at which the world recovers from the COVID-19 pandemic.
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About the data
The data presented in the Global IPO trends: Q4 2020 report and press release is from Dealogic and EY. 2020 (i.e., January-December) is based on completed IPOs as of 31 December 2020. All data contained in this document is sourced from Dealogic, CB Insights, Crunchbase and EY unless otherwise noted. Special purpose acquisition company (SPAC) IPOs are excluded in all data included in this report, except where indicated.