– Megadeals are back as 10 listings raise US$1b+ in 3Q 2017; 21 year-to-date
– 2017 full-year global IPO volume expected to reach 1,600 — 1,700 deals with proceeds to exceed US$190b
– Regulatory changes worldwide lay groundwork for bumper 2018
– Outlook: Year-end rally expected given a positive momentum and IPO sentiment
After a strong first half of the year, results of the global IPO market through September show that IPO volume has already exceeded the full-year totals for 2016. In the period from January to September 2017 there were 1,156 IPOs raising US$126.9b in capital; a healthy increase of 59% by number of IPOs and 55% by proceeds compared with the same period last year, according to data in the latest EY Global IPO Trends: Q3 2017.
“At the nine-month point of the year the global IPO market has continued to build strong momentum. Given the strengthening IPO sentiment with relative low volatility and valuations at high levels, we expect a year-end rally in the fourth quarter, traditionally the busiest IPO quarter of the year. Final numbers for 2017 could fall in the range of 1,600 to 1,700 IPOs and US$190b to US$200b in capital raised, and this would mark 2017 as the best year for global IPO performance since 2007.”
Asia-Pacific tightens its grip on the global IPO market
The number of IPOs year-on-year in Asia-Pacific after nine months increased by 72% from 2016 to 690 IPOs, while capital raised is up 28% to US$53.9b. The region saw five of the world’s ten most active stock exchanges by number of IPOs and four by proceeds in 2017 year to date.
Mainland China exchanges were the most active in the region, hosting 353 IPOs in the period January to September, ahead of Hong Kong (105), Australia (61), Japan (57) and South Korea (42).
Ringo Choi, EY Asia-Pacific IPO Leader, says:
“Asia-Pacific tightened its grip on the global IPO market in the third quarter and the outlook for the fourth quarter, historically the year’s busiest for new listings, is even more upbeat. In the longer term, solid economic fundamentals, plus government action to support markets and economies in countries like China, Singapore, Australia and Japan, should keep listings strong. However, tensions in the Korean Peninsula could create bumps in the IPO road ahead.”
EMEIA gears up for Q4 with year-on-year gains and positive investor sentiment
EMEIA consolidated its position as the world’s second busiest region of the year due to 74 IPOs raising US$10.3b in Q3 2017. This is an improvement of 16% by volume and 63% by proceeds respectively on the same quarter in 2016. The region saw four US$1b+ deals in Q3 2017, spread across India, Poland, South Africa and Switzerland. These included the world’s largest IPO of the quarter, the listing of Landis+Gyr Holding AG on the Swiss Exchange (SIX), which raised US$2.4b in July.
The UK and India led the EMEIA region in Q3 2017 by deals and capital raised. London (Main and AIM) hosted 16 deals raising US$1.7b, while Bombay (Main and SME) hosted 16 deals raising US$1.8b.
Steinbach says: “Current returns of IPOs on the EMEIA main markets have outperformed the main indices, which reflects positive investor sentiment. Building on a relatively healthy economic environment, rising equity markets and confidence across the region, European IPO activity should be relatively strong going into the last quarter of the year, while India and the Gulf States are beginning to line up and take their turn before the end of the year. The last quarter of 2017 and the first half of 2018 should see further megadeals across the region, especially in the Middle East.”
Americas upbeat with activity across the region
In the year to date, the Americas has seen an increase of 57% in terms of the number of deals and a 151% increase in proceeds compared with the first nine months of 2016. The US continues to see a surge in momentum with proceeds up 89% and the number of IPOs up 35% compared with the first three quarters of 2016.
But quarter-on-quarter, US markets saw its traditional dip in the third quarter with 27 IPOs raising US$3.5b (29% lower by volume and 51% by proceeds compared with Q3 2016). However, the New York Stock Exchange (NYSE) continues to hold the top spot by proceeds this year, a full 5% above second-placed Shanghai in terms of capital raised. Financial sponsored-backed IPOs continue to drive activity and the US share of cross-border activity was up from 18% to 41% in Q3 2017 compared with Q3 2016. There were seven cross- border deals from China and one each from Argentina, Canada, Denmark and the UK.
Brazil has had an impressive run this quarter, with the B3 Exchange hosting 4 of the world’s 20 largest deals this quarter. Driven by the B3s rising stock index and falling Brazilian benchmark interest rates, 2017 is emerging as the country’s strongest year for IPOs since 2013.
Jackie Kelley, EY Americas IPO Markets Leader, says:
“Uptick in the Americas IPO activity in the first half of 2017 continues this quarter, as South America gains momentum with Brazilian and Mexican exchanges featured on the global top 10 deals and the pipeline continues to build. US market activity has accelerated in September setting the stage for continued strength through year-end. With US equity indices near all-time highs and constrained volatility, the US pipeline continues to build across sectors, led by health care and technology. We see companies ramping up their public company readiness activities in anticipation of filings in Q4 2017 or early 2018.”