Global IPO activity slows, despite robust capital raises in Q2 2018

London, 27 June 2018

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  • Geopolitical uncertainty and shifting trade policies impacted global IPO activity
  • Americas building momentum while Asia-Pacific slows down and EMEIA performs well due to active Indian exchange
  • Technology, consumer products and industrials were three most active sectors in H1 2018
  • IPO outlook: resurgence in IPO activity expected for the second half of 2018

The risks and uncertainties from geopolitical frictions and shifting trade policies have contributed to declines in global IPO activity in Q2 2018, resulting in 660 IPOs in H1 2018, a 21% decrease from H1 2017. However, despite this slowdown, global IPO markets raised US$94.3b in the first half of 2018, a 5% year-on-year increase and the highest proceeds for the first half of a year since H1 2015. These and other findings were published today in the EY quarterly report, Global IPO trends: Q2 2018.

Dr. Martin Steinbach, EY Global and EMEIA IPO Leader, says:

“Global IPO figures for the first half of 2018 dipped by volume compared with the same period in 2017, despite higher valuations on some of the world’s largest markets. The good news is that economic conditions continue to be encouraging, equity valuations are high in many parts of the world and interest rates remain low. As a result, we expect a resurgence in IPO activity during the second half of 2018.”

Americas IPO momentum builds

The Americas defied market volatility to have a strong H1 2018, increasing proceeds by 31% to US$35.3b and regaining the lead in proceeds amongst regions for the first time since 2014. The NYSE and NASDAQ ranked among the top three exchanges by proceeds globally in H1 2018 and contributed heavily toward an 18% year-on-year increase in deal numbers since 2017.

This strong momentum is largely a result of good performance, especially in the US where IPOs posted average first-day returns above 10% and share price performance post-IPO exceeded broad equity indices. US IPOs accounted for 83% of volume and 85% of proceeds on Americas exchanges in H1 2018.

Jackie Kelley, EY Americas IPO Markets Leader, says:

“The second quarter of 2018 was marked by an influx of technology IPOs entering the US market. From 2013 to 2017, we saw health care companies dominate the markets in terms of deal count, but since then we’ve seen technology companies slowly gaining. Deal count and proceeds raised are up compared with last year, and post-IPO share price performance is solid, creating momentum heading into the second half of the year.”

Investor appetite remains high in Asia-Pacific, despite drop in IPO activity

While investor appetite for IPOs across the Asia-Pacific region remained high, H1 2018 volumes declined 37% while proceeds were down 17% compared with H1 2017. However, Asia-Pacific still accounted for a 46% share of global IPOs and 31% of global IPO proceeds in H1 2018. Five of the ten most active exchanges by deal numbers were from this region.

In particular, Japan’s IPO market has continued to perform well in Q2 2018 with 21 IPOs raising $1.5b; $1.3b of this capital was generated by 11 technology IPOs in Q2 2018. Overall, Q2 2018 saw sizeable gains in both volume and proceeds, increasing 75% and 202%, respectively, over Q1 2018. The large increase in Q2 2018 meant that Japan finished H1 2018 with 5% decline in volume and an 8% increase in proceeds compared with H1 2017.

China’s Shanghai (SSE) exchange hosted Q2 2018’s largest IPO globally and was second among exchanges by proceeds.

Ringo Choi, EY Asia-Pacific IPO Leader, says:

“Strong macroeconomic fundamentals and investor appetite act as a counterbalance to the otherwise volatile performance of IPO activity across the region. Following the general declines in IPO performance in the first six months of 2018, largely resulting from recent interest rate increases, global political and economic uncertainties, we expect to see a rebound in the deal size of the IPOs in the second half of the year as a number of mega IPOs begin to hit the market.”

EMEIA benefits from European mega deals and strong performances in India

In EMEIA, India was the top story. India’s IPO market continued to thrive, having the second most active exchanges by number of IPOs globally in Q2 2018. More broadly, India’s H1 2018 IPO activity was 32% and 31% higher, respectively than H1 2017 in terms of number of deals and proceeds.

Overall in EMEIA, ongoing geopolitical uncertainty and shifting trade policies has defined H1 2018 as a period of caution. Deal volumes in H1 2018 in EMEIA declined by 4%.

However, IPO pipelines and activity remain robust behind the scenes. Deal proceeds in EMEIA rose 10% in H1 2018 compared with H1 2017. Furthermore, H1 2018 was above the EMEIA 10-year median for deal numbers and proceeds.

Steinbach says:

“Rising geopolitical disruptions and trade tensions mean that EMEIA’s agenda is not entirely its own. As an export-oriented region, EMEIA relies on stable relationships with its partners for trade. Despite strong economic fundamentals and strong IPO pipeline, IPO activity levels may continue to lag until investors and issuers alike feel that market conditions are more favorable.”

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Notes to Editors

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About the data

The data presented in the Global IPO trends: Q2 2018 report and press release is from Dealogic and EY. Q2 2018 (i.e., April-June) and YTD 2018 (January-June) is based on priced IPOs as of 15 June 2018 and expected IPOs in June. Data is up to 29 May 2018, 6 a.m. UK time. All data contained in this document is sourced to Dealogic and EY unless otherwise noted.

EY - 2009 – H1 2018 global IPO activity

Appendix: January 2018 to June 2018 global IPOs by sector

Sector Number of IPOs Percentage of global IPOs Proceeds (US$m) Percentage of global capital raised

Consumer products and services

91

13.8%

$7,359

7.8%

Consumer staples

49

7.4%

$2,583

2.7%

Energy

35

5.3%

$6,773

7.2%

Financials

46

7.0%

$17,621

18.7%

Health care

65

9.8%

$9,099

9.7%

Technology

119

18.0%

$22,204

23.5%

Industrials

95

4.4%

$9,190

9.7%

Materials

73

11.1%

$3,362

3.6%

Media and entertainment

30

4.5%

$5,035

5.3%

Real estate

31

4.7%

$8,864

9.4%

Retail

18

2.7%

$1,965

2.1%

Telecommunications

8

1.2%

$235

0.2%

Global total

660

100.0%

$94,289

100.0%