Geopolitical uncertainty, trade wars and market volatility have contributed to declines in worldwide IPO activity in the second quarter of 2018, resulting in 660 IPOs in the first half of 2018, a 21% decrease from the same period a year ago.
However, despite this slowdown, worldwide, IPO markets raised US$94.3b in H1 2018, a 5% year-on-year increase and the highest proceeds for the first half of a year since H1 2015, according to EY’s quarterly report, Global IPO trends: Q2 2018.
“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.”Dr. Martin Steinbach, EY Global and EMEIA IPO Leader, said.
Technology, consumer products and industrials were three most active sectors in H1 2018.
Asia-Pacific 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.
Hong Kong topped rankings in terms of initial public oferring volumes, recording an estimated 97 IPOs in total in the first six months of 2018, having raised 50.2 billion Hong Kong dollars ($6.4 billion).
However, NYSE took the crown in first-half standings based on IPO proceeds ($18.6 billion), followed by the Nasdaq ($11.4 billion), the Shanghai Stock Exchange ($10.1 billion) and the Deutsche Boerse ($8.9 billion).
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.
Outlook H2 2018
Looking ahead to the second half of 2018, across the Asia-Pacific region, IPO activity levels will depend, in part, on the mega IPOs, particularly as the Chinese government looks to repatriate technology unicorns, EY said. With combined valuations estimated as high as US$1t, 2018 could become a blockbuster year for Greater China IPOs.
"The second half of the year will be totally different from the first half," Ringo Choi, EY's Hong Kong-based Asia Pacific IPO leader, told CNBC." "We expect that the second half will be a very, very busy time for us."
EY forecasts a total of HK$200 billion ($25.5 billion) in funds to be raised in IPOs in Hong Kong this year, as a number of high profile companies are expected to come to market this year. Among them are Xiaomi, a Beijing-based smartphone maker, China Tower, the state-owned wireless infrastructure operator and Meituan-Dianping, a mobile internet company operating a local life information and trading platform.
EY is a multinational assurance, tax, transaction and advisory services firm headquartered in London with 250.000 employees in 700 offices across 150 countries.