Global initial public offering (IPO) activity reached record highs in 3Q2020, making it the most active third quarter in the last 20 years by proceeds and the second highest third quarter by deal numbers, says Ernest & Young (EY).

This is compared to past third quarters, which were traditionally slow periods for IPOs, according to findings published by EY’s quarterly report, EY Global IPO Trends: Q3 2020.

Globally, IPO activity year-to-date grew 14% y-o-y in the total number of IPOs to 872. Proceeds grew 43% y-o-y to US$165.3 billion ($224.72 billion).

IPO activity in Asia Pacific for the period saw 554 IPOs which raised US$85.3 billion in proceeds, rising by 29% and 88% respectively y-t-d.

EY says activity in the region accelerated in part due to the Covid-19 pandemic-related government stimulus policies.

In Greater China, Q3 2020 IPO activities are on track to hit historic highs with deal numbers and proceeds up 152% and 139%, respectively y-o-y.

Some US-listed Chinese companies have also chosen to conduct secondary listings on the Greater China exchanges, tapping into the Chinese equities market due to trade tensions between the US and China.

In Asean, 77 IPOs raised US$4.3 billion y-t-d, which reflected a 13% y-o-y dip in volume, but 12% y-o-y growth in proceeds.

See: Southeast Asia's IPO activity surges in 1Q despite Covid-19 standstill

In the Americas, IPO activity saw 188 deals raise US$62.4 billion in proceeds, up 18% and 33% y-t-d.

US exchanges accounted for the majority of IPOs with 82% of deals and 87% of proceeds in Q3 2020. 

In addition, the importance of Special Purpose Acquisition Company (SPAC) IPOs on US exchanges also rose in 2020.

The Brazil IPO market also picked up due to low interest rates, with 13 IPOs in 3Q2020, compared to no IPOs in 3Q2019.

Both the Asia Pacific and Americas markets, according to EY, have already exceeded y-t-d 2019 levels.

IPO activity for 3Q2020 was down 27% y-t-d at 130 in the Europe, the Middle East and Africa (EMEIA) region with proceeds of US$17.6 billion (down 24% y-t-d).

Cross-border IPO activity levels have held steady by deal numbers and proceeds, accounting for 8% and 10% of global IPO activity, respectively.

Sector-wise, technology, industrials and health care once again topped the ranks. Technology saw 210 IPOs raise US$53.9 billion, industrials saw 168 IPOs raise US$23.3 billion and health care saw 159 IPOs raise US$33.3 billion.

For 4Q2020, EY asks investors to “expect the unexpected”. Investors may seek to lock in profits as they see signs of market uneasiness.

“Globally, a divergence between economic well-being, GDP and stock market valuations, may also cause anxiety among some investors,” it says.

“While there are some unknowns in the US-China trade tensions, the outcome of the US presidential election and uncertainties still surrounding Brexit, the outlook for Q4 remains positive with a healthy spread of deals in the pipeline across many markets. As long as the window of opportunity remains open, it is expected that deals will continue to be made,” it adds.

Paul Go, EY Global IPO Leader, says: “Although the market sentiments can be fragile, the scene is set for a busy last quarter to end a turbulent 2020 that has seen some stellar IPO performance.”

“The US presidential election, as well as the China-US relationship post-election, may be the key considerations in future cross-border IPO activities among the world’s leading stock exchanges. Despite the uncertainties, companies and sectors that have adapted and excelled in the ‘new normal’ should continue to attract IPO investors,” Go adds.