Global IPO activity
Globally, there were 230 IPOs raising proceeds of US$28b in the first quarter of 2020. This is a 9% increase in deal numbers and a 85% increase in proceeds compared to Q1 2019, reflecting the continuation of global IPO momentum that built up in the second half of 2019. As in Q1 2019, the technology, healthcare and industrials sectors were the most prolific producers of IPOs in the first quarter of 2020, together accounting for 115 IPOs (50% of global IPOs by deal numbers) and raising US$15.6b altogether (56% of global proceeds). By proceeds, industrials was the strongest sector with US$6.3b raised (22% of global proceeds). To find out more about the global IPO activity in this quarter visit our Global IPO Trends following the link here.
Looking forward — 2020
The London markets have experienced some of their most volatile trading conditions for some time with COVID-19 replacing Brexit and other geopolitical tensions as the primary factor impacting markets with an effective closure of the global IPO market for the time being.
Global economic activity is likely to be depressed until the virus epidemic is under control and governments can start to release some of the restrictions. Even then it will be a significant time before activity returns to anything like normal and the very earliest we can expect activity is the second half of the year — assuming the virus is brought under control rapidly.
Despite the backdrop, we are seeing companies continue to prepare to come to market, but plans are being put on the back burner as companies prioritise staff safety and cash preservation in the face of unprecedented challenges.
We anticipate that market activity, at least in the short term, is going to be focussed on fundraising activity by existing issuers as they attempt to shore up liquidity and replace any emergency funding.
Any companies coming to market are likely to be those that have successfully weathered the COVID-19 storm including those in the technology — or technology linked sectors that are less impacted by physical restrictions. Traditional businesses that have temporarily paused or restricted business will need to demonstrate a rapid recovery of trading, and all companies can expect investors to be discerning in the choices they make.