Despite initially riding momentum carried from Q4 2019, hopes for an initial public offering (IPO) window of opportunity and rebound in the first half of 2020 were cut short by the global impact of COVID-19 (Coronavirus disease of 2019). This led to 235 deals and $28.5 billion in proceeds through the first three months of 2020. Despite the equity markets not being as bullish as expected, IPOs in Q1 2020 performed better than Q1 2019, seeing 11 percent and 89 percent increases in the number of deals and proceeds respectively, albeit from a relatively low base in 2019.
The quarter represented two extremes: an active January and February ending in a close-to-standstill March. Asia-Pacific (160 deals raising $16.8 billion in proceeds) and the Americas (40 IPOs raising $8.2b in proceeds) ended Q1 2020 ahead compared with Q1 2019 by both deal number and proceeds, while in Europe, the Middle East, India and Africa (EMEIA) (35 IPOs raising $3.5 billion in proceeds) slowed by deal number. The industrials sector dominated in Q1 2020 with 45 IPOs raising $6.3 billion. By deal numbers, technology (40 deals) and healthcare (30 deals) were also active in the year to date 2020. These and other findings were published in the EY quarterly report, Global IPO trends: Q1 2020.
Paul Go, EY Global IPO leader, says “Riding the strong tailwinds from Q4 2019, the global IPO markets started off strongly in the first two months of 2020. However, the unexpected and novel events surrounding COVID-19 took a toll on the global health of equity markets and, together with other global market factors, have caused market turbulence last seen only during the global financial crisis of 2008. This extreme market volatility makes any ambitions to go public highly uncertain, both in terms of timing and valuation.”
The Americas saw a 47 percent increase in proceeds ($8.2b) and a 14 percent increase in deals (40 IPOs) compared with Q1 2019. US exchanges accounted for the majority of Americas IPO activity with 60 percent by deal numbers (24 IPOs) and 89 percent by proceeds ($7.3 billion) 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 $7 million in total proceeds. Meanwhile, Brazil’s B3 market saw four IPOs raising $785 million in proceeds. Jackie Kelley, EY Americas IPO leader, says “IPO activity across the Americas saw a rise in Q1 2020 by volumes and proceeds compared with Q1 2019.
While COVID-19 and oil tensions have largely dried up IPO activity for now, IPO preparation continues and the IPO pipeline is growing, as issuers look for opportunities to be prepared for calmer and more conducive markets.” Asia-Pacific prevailed with 160 IPOs and $16.8 billion in proceeds in Q1 2020, a 28 percent and 110 percent increase compared with Q1 2019, respectively, and these accounted for 68 percent of the global deal numbers and 59 percent by proceeds.
In Greater China, IPO activity in Hong Kong was more negatively affected than within the Mainland China exchanges. Combined, Greater China deal numbers increased 34 percent (90 deals) while proceeds increased by 104 percent (US$13.2 billion) compared with Q1 2019. Japanese exchanges also continued to flex throughout the quarter with 28 deals and $592 million in proceeds, representing a 22 percent increase in deals but a 21 percent fall in proceeds compared with Q1 2019.
Through Q1 2019 EMEIA saw 35 IPOs and $3.5 billion in proceeds. While deal numbers were down 31 percent, proceeds skyrocketed 133 percent year-on-year. This is partly explained by India’s Financials IPO, SBI Cards & Payments Services Ltd, which raised $1.4 billion. EMEIA continued to account for three of the top 10 exchanges globally by proceeds in Q1 2020. PR NEWSWIRE