A recent EY report, titled Global IPO trends: Q3 2017, revealed Asia-Pacific led in IPO activity this year, with the number of IPOs in the region increasing by 72 per cent to 690 exchanges since 2016, with China, Hong Kong and Australia among the high performers in the region.
“Asia-Pacific is expected to continue to see robust IPO activity for the rest of 2017,” the report said.
“China is expected to remain dominant due to massive demand for technology IPOs while the Australian IPO market is expected to continue to be strong, led by exceptional post-IPO performance and the return of resources companies.”
China took the lead in IPO exchanges, hosting 353 IPOs between January and September, followed by Hong Kong with 105 exchanges and Australia with 61, an EY spokesperson said.
Commenting on the report, EY Asia-Pacific IPO leader Ringo Choi said the region had “tightened its grip on the global IPO market in the third quarter” with the outlook for the fourth quarter, “historically the year’s busiest for new listings”, being “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,” he said.
“However, tensions in the Korean Peninsula could create bumps in the IPO road ahead.”
Domestically, IPO activity in Australia largely occurred in the materials sector, with the shift towards small-caps listings persisting as deal numbers rose by 13 per cent but proceeds fell by 65 per cent since the previous year, according to the EY spokesperson.
“There were 12 IPOs on the Australian Securities Exchange (ASX) in Q3 2017, raising US$209 million and propelling the totals for the first nine months of the year to US$1.1 billion in IPO proceeds, from 61 IPOs,” the spokesperson said.
EY Oceania IPO leader Gavin Sultana said “recovering commodity prices” were the stimulant for IPO activity in the materials sector, “albeit with predominately small cap companies”.
“IPO activity for mid to large cap companies has been limited as investors remain cautious and demand from alternate sources of capital is strong,” he said.
“For large cap deals, investors remain cautious and demand from alternate sources of capital remain strong.
“We expect an increase in IPO volumes in Q4 2017, which is traditionally the most active quarter of the year.”
