Global IPO volume down in first quarter as issuers wait for market conditions to improve

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  • Global IPO activity down 39% by volume and 70% by value on same period of 2015
  • Activity falls but Asia-Pacific remains world’s busiest region
  • Multifaceted, multitrack strategies now hardwired into process as companies explore other options or wait for confidence to return

SINGAPORE, 22 MARCH 2016 – Global IPO activity slowed significantly in Q1 2016 with a total of 167 deals raising just US$12.1b according to the quarterly EY Global IPO Trends: 2016 1Q. This represents the weakest first quarter since 2009 with a 39% drop in volume and a 70% decline in total capital raised compared with the same period last year.

Fears of a global economic slowdown, increased volatility, falling oil prices and the current equity market turbulence have all contributed to the slow start to the year. Notably, weak activity was evident across the Americas, Asia-Pacific and EMIEA, unlike recent quarters when softness in some markets has been mitigated by better performance in other geographies.

Activity falls but Asia-Pacific remains the world’s busiest region
In Asia-Pacific, IPO volumes fell by 31% (102 deals) and capital raised by 55% (US$6.6b) in 1Q16 compared with 1Q15. Yet the region was still the most active, accounting for 61% of global IPO volumes.

Max Loh, EY’s Asean and Singapore Managing Partner, says:
“First quarter results have shown that IPO activity in Asia-Pacific is clearly not immune to concerns over global growth, equity market volatility or fluctuating commodity prices. The good news is that while a slowdown is evident, the region is still the world’s most active in terms of IPO listings and the prospects for a swift rebound are positive.

“Japan remains on course for another record year in terms of IPO volumes, while the Chinese market has stabilized and is gathering momentum for a recovery. The announcement of the Chinese Government’s latest five-year plan in March, including measures to boost consumption-led growth, will also help bolster investor confidence across the region and beyond.

“Given economic and market volatility, depressed commodity prices and currency depreciation, Asean had a quiet first quarter. Singapore, Malaysia, Indonesia and Vietnam saw a combined 11 deals raising US$205m.”

Volatility leads to multitracking and a “wait and see” approach
With IPOs particularly sensitive to volatility and general negative economic sentiment, a wait and see approach and multitracking have predominated, as issuers wait for market conditions to improve or seek alternatives such as M&A which, while softening on 2015’s stellar performance, is currently faring better than IPOs, with a less steep decline in activity.

This wait and see approach is evidenced by the fall in the proportion of private equity- and venture capital-backed IPOs globally (down 80% 1Q15 to 1Q16 by number of deals). Technology IPOs were also down compared to 1Q15 (24% worldwide in 1Q16), while in the US there were no IPOs in this sector in the first quarter, as technology companies and their pre-IPO investors wait to realize their valuation of a company at a later date. In addition, the 70% fall in global capital raised in 1Q16 shows that deal sizes are smaller (median deal size on main markets globally is down 30% year-on-year), with companies selling a smaller IPO in anticipation that a further offering can be made when the market improves.

Commenting on the global IPO market, Dr. Martin Steinbach, EY EMEIA IPO Leader, says:
“While global IPOs have got off to an extremely slow start, M&A is more active and private capital looks set for a busy year ahead, with options being trailed by companies as part of multitrack strategies proliferating. There has perhaps never been such an interesting or challenging time to generate value.

“In the current climate, both IPO-ready companies and potential investors are in effect sheltering from volatile, gloomy weather and waiting for the outlook to improve. This explains why there have been more postponed IPOs in the first quarter this year than last year, why deal sizes have fallen and why financial sponsors are biding their time for the exit environment to improve, which is always a sure sign that these sponsors think better times are ahead.”

Health care the bright spot in the US
Capital raised through IPOs in the US dropped by 88% compared to the first quarter of 2015, to US$753m. Deal numbers fell by 71%, with just 10 IPOs, all of which came from the health care sector so far in 2016.

Jackie Kelley, EY Americas IPO Leader, says: “With increased volatility in the markets and the uncertainty surrounding oil prices, interest rates and US elections, we expected a stop-start year for IPO activities. Despite a slower than usual start in the first quarter, we’re seeing signs that the IPO window will finally open. The pipeline of offerings ready to price is building up and IPOs are outperforming the S&P 500 this quarter. As the markets recover and confidence steadies, we are optimistic that IPO levels will start to trend closer to historic norms.”

Financial sponsors remain an important driver of IPOs in EMEIA
Capital raised also fell sharply in EMEIA, declining by 76% in 1Q16 (raising US$4.7b) compared with the same period last year, while deal numbers were down 43% at 51 IPOs. In contrast to other regions, PE- and VC-backed IPOs, although down on 2015 levels, remain an important driver of activity and accounted for 33% of capital raised and 10% of deal volumes in the first quarter, as the market continues to benefit from the European Central Bank’s (ECB) on-going monetary stimulus.

The London Main Market and AIM were the leading markets in the region for IPOs in 1Q16. They accounted for 47% of European listings and hosted two of the top five largest IPOs globally in 2016 as well-priced businesses, often backed by PE, continue to attract investor interest and deliver strong aftermarket performance.

Dr. Steinbach says, “Despite improving economic fundamentals, EMEIA has experienced a difficult start to 2016, affected by the contagion of global volatility. However, the first quarter is always one of the slowest of the year and we expect the end of the reporting season to hasten activity across the region. Uncertainty over the UK’s referendum on EU membership might also affect IPO activity levels until 3Q16.”

Global IPO activity will improve as the year progresses
There are reasons to expect that the forthcoming quarters will show an improvement in activity. From an economic perspective, the US Federal Reserve is expected to moderate its interest rate hikes, while the ECB provided additional stimulus in early March. China, too, has eased monetary policy with a further cut in reserve requirement ratios and is likely to react to lower growth expectations with further supportive measures. The Chinese authorities are also formulating specific measures to support the IPO market, including a compensation regime, which aims to prevent IPO fraud. The future path of oil prices is hard to predict, but recent signs of stability, albeit at lower levels, should bolster investor sentiment.

Kelley, commenting on the global prospects for the year ahead, says, “While there are many potential risks and investors face an uncertain outlook, the IPO pipeline remains healthy in a number of regions and signs of stabilization in the economic and political backdrop are likely to prompt an increase in activity in the coming quarters.”


Notes to editors

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About the data
Analysis included on this press release includes all deals listed up to 11 March and EY’s expectation of deals that will close in the rest of the month. Data sourced from Dealogic as of 11 March 2016. January 2016 through March 2016 (i.e., 1Q16 YTD) IPO activity is based on priced IPOs as of 11 March and expected IPOs by the end of March. M&A data is sourced from Dealogic as of 16 March 2016.

Appendix: January 2016-March 2016 global IPOs by sector


Number of deals

% of global deal number

Proceeds (US$)

% of global capital raised

Consumer products and services





Consumer staples















Health care




















Media and entertainment





Real estate















Global total





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