Global IPO activity to slow down in 2016, pick up in 2017: EY

THE year 2016 will be a quieter year than 2015 for IPO (initial public offering) activity around the world, but next year will see activity pick up again.

This is because high levels of geopolitical uncertainty this year has weighed on dealmakers. However, stability is expected to return in 2017.

Said Ernst & Young (EY) in a release issued on Friday: "Although global IPO activity in 2016 will likely lag behind 2015 levels, the outlook for 2017 is positive due to improving economic fundamentals, high valuations and lower volatility which will support IPO sentiment."

Global IPO proceeds in the January-September period this year were 39 per cent lower than in the same period in 2015, and deal volumes (704) were down 23 per cent, said EY in the report that detailed global IPO trends for this quarter.

This is likely because "political uncertainty concerning Brexit and the US elections, rather than the events themselves, is causing private companies to delay their decisions on when to list", it said.

Added to the mix are tensions in the Middle East, China's slowdown and uncertainty over US monetary policy.

"Rarely, if ever, has there been a year with quite so many complex, inter-related external factors for decision makers to contend with and wait upon for a definitive outcome," the report opined.

But there are signs pointing towards a recovery, with the Asia-Pacific emerging as a focal point for IPOs globally.

In the third quarter of this year, IPO proceeds rose 84 per cent globally when compared to the same period last year. Number of deals also rose 21 per cent, said EY.

The Asia-Pacific was the stand-out performer in Q3 2016, with a 138 per cent surge in proceeds to US$24.2 billion and a 41 per cent increase in deal volume (176) compared to the previous quarter. The region accounted for 69 per cent of IPOs worldwide and a 53 per cent share of proceeds.

Exchanges in South-east Asia raised a total of US$1.2 billion from 19 deals in Q3, led by Indonesia (US$451 million from three deals), Singapore (US$439 million from six deals), Thailand (US$279 million from seven deals) and Malaysia (US$29 million in three deals).