Global IPO proceeds up 28% in Q1 2018: EY report

GLOBAL initial public offering (IPO) activity in the first quarter of the year raised US$42.8 billion across 287 deals, according to Ernst & Young's (EY) quarterly report on global IPOs on Thursday.

Proceeds raised represented a 28 per cent increase on Q1 2017, despite a 27 per cent fall in the number of deals done.

Said Martin Steinbach, EY global and Europe, the Middle East, India and Africa (EMEIA) IPO leader: "Global growth in IPO proceeds outpaced deal numbers in a relatively strong first quarter. Driven by larger transactions, global IPO activity started out with a strong increase in proceeds in what is traditionally the slowest quarter of the year, despite a decline in deal numbers."

He added: "However, market volatility in February did slightly dampen investor confidence, slowing momentum gained from calendar year 2017, the highest performing 12 month period since 2007."

Across the Asia-Pacific (APAC) region, IPO deal activity declined in the first quarter with 157 deals, a 39 per cent fall from the year ago period, and the lowest quarterly total since Q2 2016.

Meanwhile, total proceeds for the quarter stood at US$11.4 billion, down 26 per cent compared to Q1 2017; the lowest level since Q1 2016.

Even though APAC experienced a drop in IPO activity, it remained the world's busiest region for new listings in Q1 2018; in part by activity in South-east Asia, EY said.

Max Loh, EY's Asean and Singapore managing partner, said: "IPO activity in APAC in Q1 2018 was defined by the slower pace of mainland China IPOs due to greater regulatory scrutiny and a slowdown in various markets."

South-east Asian stock exchanges hosted 18 IPOs in the first quarter of the year, a 20 per cent increase in deals compared with the year-ago period.

This growth was driven mainly by IPOs on the junior boards of stock exchanges in South-east Asia, which saw nine IPOs this quarter compared to six IPOs in Q1 2017, EY said.

While the total number of deals made in the first quarter grew, proceeds raised across IPOs on stock exchanges in South-east Asia declined to US$661 million in Q1 2018, from US$1.15 billion in Q1 2017.

Among exchanges in the Asean region, The Stock Exchange of Thailand held the top spot among markets with six IPOs raising US$373 million, while Vietnam's Ho Chi Minh Stock Exchange raised US$184 million from the HDBank IPO.

"Asean IPO markets were active in Q1 2018 as we saw the largest number of deals quarter-on-quarter since 2014. The pipeline for IPOs across Asean in 2018 looks fuller than in 2017, boosted by strong economic fundamentals in these markets," Mr Loh said.

However, he cautioned that "exchanges will need to brace itself for headwinds from geopolitical risks; availability of alternative sources of funding such as private equity and crowdfunding; and uncertainties around trade policies and reforms".

In the EMEIA region, where its 86 deals were second to APAC, US$16 billion was raised in the first quarter. Europe accounted for 39 IPOs raising US$14.7 billion, of which six IPOs alone raised US$9.8 billion.

Emerging markets contributed strongly to overall IPO performance in EMEIA, with India's Bombay and National exchanges recording a 14 per cent increase in proceeds raised and a 5 per cent increase on deals done, EY said.

In the Americas, US$15.4 billion was raised across 44 IPOs, an increase of 22 per cent and 29 per cent respectively on the year-ago period, making it the only region which has grown in terms of proceeds raised and deals.

Said Mr Steinbach: "Looking ahead, the outlook remains positive in many markets around the world and we expect to continue to see IPOs from a range of sources including large tech, high growth, cross-border listings, carve-outs and state-owned enterprises."