- Global IPO activity continues to slow despite unicorns coming to market
- Technology, health care and industrials were the most active sectors in H1 2019
- Mega IPOs and robust IPO pipelines across all regions will bolster future activity
The trend of unicorn IPOs coming to market and pushing their proceeds to historic levels continued in Q2 2019 despite ongoing geopolitical uncertainty and trade tensions, resulting in 507 IPOs in H1 2019, raising total proceeds of US$71.9b. While deal numbers were down 28% from H1 2018, first-day returns on the main markets were up 15.4% on average and post-IPO performance increased 28.4%. Technology, health care and industrials saw the largest share of IPOs in H1 2019, together accounting for 266 IPOs (52% of global IPOs by deal numbers) and raising US$47.8b altogether (66% of global proceeds). By proceeds, technology was the strongest sector with US$29.3b raised (41% of global proceeds). These and other findings were published today in the EY quarterly report, Global IPO trends: Q2 2019.
EMEIA continue to proceed cautiously within persistent geopolitical uncertainties
In EMEIA, deal volumes and proceeds were down from YTD 2018 with EMEIA exchanges posting 123 IPOs (a decline of 53%) and raising a total of US$16.0b (also a decline of 48%). Despite these challenges, EMEIA accounted for five of the top ten exchanges globally by proceeds and two by deal numbers. Overall, due to strong first-day returns and YTD IPO performance and investor confidence, EMEIA IPO markets are expected to gain momentum in the second half of 2019.
Europe experienced a notable increase in IPO activity in Q2 2019, with volumes up 100% (48 deals) and proceeds up a significant 3,338% (US$12.5b) from Q1 2019.
Both domestic and cross-border activity also gathered steam in the UK in Q2 2019 as 11 companies went public, representing proceeds of US$4.5b.
“Whilst we expect IPO activity in the EMEIA region to rebound in the second half of 2019, we do not foresee any significant uptick in capital market activity in the Czech Republic. Czech companies continue to view bank loans as a source of cheaper and more flexible financing compared to capital markets, and are put off by the perceived burden of stock exchange reporting. However, we expect to see a number of new bond issues over the next six months, as well as increased use of the new START market by SMEs to raise small tranches of capital,” says Peter Wells, lead partner of EY’s transaction advisory services.
Americas IPO markets rebound
On a quarterly basis the Americas saw 87 IPOs that raised $28.1b in Q2 2019, representing an increase of 5% by deal numbers and rise of 50% by proceeds from Q2 2018. However, YTD 2019 activity was down 14% with 118 deals, and proceeds fell by 12% to US$33.6b, compared with YTD 2018.
Despite this, the NYSE and NASDAQ ranked first and second respectively by proceeds globally in H1 2019. US exchanges accounted for 75% of Americas IPOs by number of deals (88 IPOs) and 96% by proceeds (US$32.2b) in H1 2019, driven by several high-profile technology unicorns that went public during Q2 2019.
Asia-Pacific IPO plans accelerated to get ahead of economic headwinds
Ongoing trade tensions between China and the US continued to impact IPO activity in YTD 2019, inhibiting a return to 2018 levels. IPO activity across the Asia-Pacific region in YTD 2019 was down 12% by volume (266 IPOs) and 27% by proceeds (US$22.3b), compared with YTD 2018.
However, Asia-Pacific continued to dominate global IPO activity YTD 2019, by volumes, representing six of the top ten exchanges. By proceeds, the region accounted for three of the top ten exchanges. Asia-Pacific’s main markets experienced average first-day returns of around 19% and average current returns of 34%, illustrating that IPO performance continues to elevate IPO investor sentiment.
Mainland China exchanges saw 27% more IPOs (33 IPOs) in Q2 2019 compared with Q2 2018, but a 38% decline in funds raised (US$5.1b) due to a lack of mega IPOs. However, Mainland China IPO activity is expected to improve during H2 2019 following the launch of the Sci-Tech innovation board (STAR Market) on the Shanghai Stock Exchange.
Japan’s IPO markets remained stable in YTD 2019, posting a slight increase in deal numbers compared with YTD 2018. There were 41 IPOs in YTD 2019 versus 39 IPOs in YTD 2018 while proceeds (US$1.3b) were notably lower than YTD 2018 (US$2.8b).
Appendix: January 2019 to June 2019 global IPOs by sector
|Sectors||Number of IPOs||Percentage of global IPOs||Proceeds (US$m)||Percentage of global capital raised|
|Consumer products and services||37||7.3%||$3,177||4.4%|
Media and entertainment
Source: Dealogic, EY