SINGAPORE (June 30): The impact of the Covid-19 pandemic has caused IPO activity to decline in the first half of 2020, according to the EY quarterly report, Global IPO trends for 2Q2020.
Overall, 2Q20 saw a decline compared to 2Q19 across all regions by deal numbers. For the Americas, Europe, the Middle East, and Africa, proceeds were down in 2Q20 y-o-y. In Asia Pacific, deal numbers fell by 18% y-o-y, while proceeds rose by 28%.
Global IPO activity fell 48% (97) in volume, and plunged 67% (to US$13.2 billion or $18.39 billion) in proceeds in April and May, compared to the same period in 2019.
The decline in the two months dragged down 1H20 regional activities and overall year-to-date deal volume, which fell 19% and 8% y-o-y, respectively.
Global IPO activities in the Americas and Europe, the Middle East, and Africa remained sluggish in June, while the number of deals increased in the Asia Pacific region.
Year-to-date, the Americas deal volume and proceeds both fell by 30%. In Europe, the Middle East, and Africa, deal volume and proceeds fell 50% and 44% respectively. IPO activity in Asia Pacific increased by 2% for deal volume, and 56% in proceeds.
The technology, industrials, and health care sectors dominated year-to-date in 2020. Technology saw 87 IPOs raise US$17.2billion, industrials saw 83 IPOs raise US$9.6billion, and health care had 76 IPOs that raised US$15.9billion.
Asia Pacific exchanges also accounted for four of the top five exchanges by deal volume, and three of the top exchanges by proceeds.
NASDAQ led 2020 year-to-date in proceeds, followed by the Shanghai Stock Exchange and Hong Kong Stock Exchange.
By deal volume, Shanghai led the way, along with the Hong Kong and NASDAQ markets.
In Asean, IPO volume dipped y-o-y by 12% by saw a 72% increase in proceeds on the back of a strong 1Q20. The same quarter saw the largest IPO in Thailand’s history.
There was a total of 11 IPOs across the Asean market in 2Q20.
The Indonesia Stock Exchange was among the top 12 global exchanges in deal volume.
“Although IPO activity declined in April and May 2020 because of the economy lockdown in most markets, we began to see a strong rebound in June,” says Paul Go, global IPO leader at EY.
“Well-prepared companies, in the right sectors and business models, can successfully adjust during the pandemic, and will find the right window of opportunity amid turbulent capital markets for the rest of 2020,” he adds.
“With the COVID-19 pandemic, Asean IPO activity has significantly declined across the various markets. Companies continue to want to tap the capital markets for funding and growth while there is ample liquidity searching for yield and investment opportunities in quality companies,” says Max Loh, Asean IPO leader at EY.
“However, with the global economic challenges, IPO sentiment is expected to remain fairly tepid in the short term. With so much uncertainty and volatility, companies are evaluating the impact on their businesses and how they can de-risk their IPO plans and timing. Taking into account that Q3 is typically a slower time of the year, it does look like there may only be more robust IPO activity in late 2020 and 2021, as the market attempts a reset and the pipeline looks for IPO windows,” he adds.