Asean IPO volume, proceeds rebound in Q3 from previous quarter: EY

DESPITE gloomy macroeconomic conditions as the Covid-19 pandemic drags on, initial public offering (IPO) activity bucked a "traditionally slow" third quarter on the back of liquidity in global markets.

According to a quarterly IPO trends report by professional services firm EY, Asean markets saw strong growth in volume and proceeds from IPO activity in the third quarter of 2020 compared to the year-ago period.

Asean saw 33 IPOs in Q3 which raised a total of US$1.10 billion. On a quarter-on-quarter basis, this translated to increases of 175 per cent and 491 per cent in volume and proceeds respectively.

Year to date, the Asean region has had 77 IPOs, some 13 per cent lower than the corresponding period last year. Proceeds from the IPOs, however, totalled US$4.30 billion, an increase of 12 per cent from the previous year.

Singapore, in particular, has had seven IPOs this year which raised a total of US$0.50 billion, representing year-on-year declines of 30 per cent and 70 per cent respectively. The Republic had one IPO in Q3 in the form of Singapore Paincare Holdings, which listed in July.

EY said the Republic continues to be among the top three countries of origin for companies seeking to conduct overseas listings with six IPOs outside the home country. Malaysia had seven while Greater China emerged first with 26 such listings.

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Meanwhile, the broader Asia-Pacific region saw listing activity in the year to date surpass levels from a year ago, booking increases of 29 per cent and 88 per cent in terms of volume and proceeds respectively. EY noted that activity in the region was accelerated due in part to pandemic-related stimulus policies that were rolled out by governments.

Ringo Choi, Asia-Pacific IPO leader at EY, said: "Robust IPO activity in Q3 2020 suggests that Asia-Pacific companies are choosing to protect their value through capital markets in preparation for a worst-case scenario.

"IPO candidates are seizing opportunities to go public to shore up their capital base for future investments and remain resilient against a potential next wave of the pandemic."

While IPO activity in the Asia-Pacific is on track to well exceed 2019 volumes and proceeds on the back of some mega transactions completed and in progress, EY is quick to warn that the US presidential election could have a negative impact on both regional and global equity markets, which will in turn affect IPO activity levels.

On a global front, EY said Q3 was the most active third quarter in the last 20 years by proceeds, and the second-highest third quarter by deal numbers. Exchanges around the world saw a 77 per cent year-on-year increase in IPO transactions to 445 in Q3, with proceeds soaring 138 per cent to US$95 billion.

Some mega IPOs in the quarter include chipmaker Semiconductor Manufacturing International Corp, which listed on China's technology-focused STAR Market in July, and software solutions company Snowflake Inc, which made its debut on the New York Stock Exchange in September.

According to EY, sectors such as technology, industrials and healthcare have dominated global IPO activity this year, accounting for 62 per cent by deal numbers and 67 per cent by proceeds.

Despite uncertainty over US-China trade tensions and the US presidential election, EY is expecting deals to continue as long as a "window of opportunity remains open".

In particular, it foresees sectors such as technology, healthcare and industrials will remain investor favourites, along with other companies that can demonstrate resilience and adapt to the current environment.

Paul Go, EY Global IPO leader, said: "Although the market sentiment can be fragile, the scene is set for a busy last quarter to end a turbulent 2020 that has seen some stellar IPO performance.

"Despite the uncertainties, companies and sectors that have adapted and excelled in the 'new normal' should continue to attract IPO investors."