The current year saw the highest level of global IPO activity in 10 years, and 2018 looks to be “exceptional”, says EY.
According to EY’s Global IPO trends: Q4 2017 report, 2017 saw 49 per cent growth in global IPO activity compared with the previous year, amounting to 1,624 IPOs globally and reaching $188.8 billion in proceeds.
This was up from the 1,093 deals that raised $134.5 billion in 2016, according to the report.
Commenting on the results, EY global IPO leader Martin Steinbach said 2017 would close with more IPOs than any year since before the global financial crisis (2007), with the “great momentum” seeing IPO candidates “lining up for 2018”.
“The outlook appears bright, driven by lower volatility across regions, high valuation levels and a renewed appetite for cross-border IPOs, particularly in the US, Hong Kong and London,” Mr Steinbach said.
“A healthy global pipeline across a broad range of sectors and markets suggests IPO activity levels will be up with more mega deals, thereby increasing the global proceeds in 2018.”
The top IPO issuers by number of IPOs outside home country were China (25) and Singapore (20), followed by Malaysia (8), US (8) and Israel (7), the report revealed.
The Asia-Pacific region was earmarked as the “world’s standout region for IPOs” of the year, making up 58 per cent of IPOs around the world.
“Asia-Pacific saw rapid growth in IPO numbers in 2017 and cemented the region’s position as the world’s most active for new listings,” said EY Asia-Pacific IPO leader Ringo Choi.
“While there were noticeably fewer mega-IPOs this year, smaller deals kept the market on the move. There was a thriving market in small-cap IPOs as far afield as mainland China, Japan and Australia,” he said.
“We expect to see this trend continue in 2018, with IPOs also expected to rise in Hong Kong, Japan and the ASEAN region.”
The region would remain “the world’s most active region” for the new year, driven by “strong economic growth in a number of countries, buoyant investor confidence, rising equity markets and a robust pipeline of companies ready to list”, the report said.
Domestically, IPOs in Australia increased to 101 from 81 in 2016, representing an increase in volume of IPO activity by nearly a fifth (19.8 per cent), with EY Oceania IPO leader Gavin Sultana remarking that a trend towards small-cap IPOs had characterised the year.
“We expect that this segment of the market will remain strong into 2018 driven by activity in the technology and materials sectors,” Mr Sultana said.
“IPO proceeds were significantly down in 2017, reflecting the combination of strong demand from alternate sources of capital and a cautious approach from investors. Whilst we do expect average IPO proceeds to increase in 2018, strong demand from alternate sources of capital is likely to continue to restrict volumes at the top end of the market.”
Looking forward, “everything [is] in place for an exceptional 2018”, Mr Steinbach said.
“The stronger-than-expected turnaround in economic activity in the eurozone has boosted expectations for global economic growth,” he said.
“All the major engines of growth in the global economy are now synchronised in an upward trajectory for the first time since the end of the global financial crisis.”