16th December 2019 – Geopolitical uncertainty and trade tensions heavily impacted the 2019 IPO landscape, pushing overall IPO activity down in terms of deals and proceeds. 2019 has registered 1,115 IPOs with proceeds of US$198b – a 19% fall in deal volume and a 4% decrease in proceeds compared with 2018. However, as US-China-EU trade tensions, concerns about economic growth and other geopolitical issues – including Brexit and social unrest in Hong Kong – subside, a healthy increase in IPO activity is expected in 2020, particularly in the first half of the year, as markets are expected to become more volatile leading up to the US Presidential elections.

While Asia Pacific saw overall declines in deal volume (-1%) and proceeds (-8%) for 2019, it led the regions, with EMEIA second by both deal volume and proceeds and the Americas third in both measures. The technology sector continued to dominate in 2019 with 263 IPOs raising US$62.8b. By deal numbers, health care (174 deals) and industrials (147 deals) were also active in 2019, while by proceeds, energy (US$32b) and health care (US$22.5b) performed well.

Activity in Q4 2019 (353 IPOs and proceeds of US$84.5b) was 5% lower in deal volume and 53% higher by proceeds compared with Q4 2018. Two of the largest IPOs in 2019 came to the market in Q4, improving IPO activity for the quarter. These and other findings were published today in the EY quarterly report, Global IPO trends: Q4 2019.

Paul Go, EY Global IPO Leader, says: “Two of the largest and long-awaited IPOs came to the market in Q4 2019, improving what had otherwise been a lackluster year in terms of IPO activity. As we head into 2020, we anticipate that some of the geopolitical uncertainties and trade tensions that plagued the IPO market in 2019 will fade. Market volatility will remain, and owners with the ambition of a successful IPO in the near-term will need to be prepared to take advantage of the windows of opportunity expected in the early part of 2020.”

Asia Pacific IPO markets remain resilient

Asia Pacific continued to dominate global IPO activity, accounting for seven of the top ten exchanges globally by deal number and five of the top ten exchanges by proceeds in 2019. However, 2019 deal volumes (668 deals) were down by 1% versus 2018 and proceeds (US$89.9b) were down by 8%.

Japanese exchanges posted 89 IPOs in 2019, a 9% decrease in terms of volume compared to 2018, with proceeds of US$3.6b representing an 87% drop compared with 2018 proceeds. Due to the early success of Shanghai’s STAR market, Mainland China saw an increase in IPO activity in Q4 2019, which pushed 2019 deal volumes past 2018 by 89% (197 deals) and proceeds by 69% (US$35.7b). The Hong Kong Stock Exchange saw a 25% decline by deal number (154 IPOs), but a 4% increase by proceeds (US$37.9b).

In 2019, Southeast Asia’s exchanges posted 126 IPOs raising US$8b in proceeds – a 4% increase in deal volume and rise of 11% in value over 2018. Exchanges in Indonesia (54 IPOs raising US$1.1b), Malaysia (29 IPOs raising US$0.5b) and Thailand (27 IPOs raising US$3.3b) were most active, followed by Singapore (11 IPOs raising US$2.8b) and Philippines (4 IPOs raising US$0.4b). In Q4 2019, Southeast Asia’s exchanges saw a total of 39 IPOs raising US$4.2b, compared to 38 IPOs with proceeds of US$1.9b in Q3.

Max Loh, EY Asean IPO Leader and Managing Partner, Singapore and Brunei, Ernst & Young LLP, says:

“Despite the geopolitical and trade uncertainty that prevailed throughout much of the year, Asia-Pacific IPO markets performed somewhat steadily in 2019. As we move into 2020, we expect IPO activity to pick up though this would still be moderated by ongoing trade and economic headwinds and investor confidence.

“Singapore’s policy and market initiatives should prove fruitful in terms of improved IPO activity in 2020, particularly in the areas of REITs and business trusts. Across Southeast Asia, we expect that IPO activity will continue to be dominated by entrepreneurial companies coming to the public markets.”

Americas IPO activity falls amid geopolitical and trade uncertainty

With 213 IPOs raising US$53.9b, deal volumes and proceeds of Americas IPO markets in 2019 fell compared with 2018 numbers by 20% and 10%, respectively. The US remained in the spotlight as the leading source of IPOs in 2019, accounting for 77% of Americas IPOs and 93% by proceeds, including 24 unicorn IPOs.

Canada’s Toronto Stock Exchange and Venture Exchange saw 18 IPOs, which raised US$295m, accounting for 8% of Americas IPO deals, while Brazil’s B3 exchange posted 5 IPOs over the year, with proceeds of US$2.3b, and Chile posted 2 IPOs, with total proceeds of US1.1b.

Jackie Kelley, EY Americas IPO Leader, says:

“As is typical, the bulk of Americas’ IPO activity occurred in the US for 2019. However, there was activity across a range of markets including Brazil, Chile and Canada. Coming into year end, we see momentum in all of these markets. We expect a strong environment across the Americas for business leaders who have the ambition to go public in 2020.”

EMEIA IPO market buoyed by strong Q4 activity

In EMEIA, deal volumes (234) were down 47% in 2019; however, proceeds (US$54.2b) were up 14% — the only region to see a rise in proceeds in 2019. EMEIA exchanges also remained strong, accounting for three of the top ten exchanges globally by proceeds in 2019 (Saudi Arabia, UK and Germany) and four of global top ten IPOs by proceeds.

EMEIA IPO proceeds picked up strongly in Q4 2019 due to four mega IPOs, including Saudi Aramco, with a rise of 174% by proceeds but a decline of 45% by deal number compared with Q4 2018.

Dr. Martin Steinbach, EY EMEIA IPO Leader, says: “EMEIA welcomed the largest-ever IPO with Saudi Aramco, which helped drive an increase of 14% in IPO proceeds for the year. As the disruptive headwinds that dampened IPO activity subside, we anticipate a positive impact on investors’ sentiment for IPOs and a modest upturn of IPO activity in EMEIA in 2020. Overall, we expect investors to be more selective in their choice of high-quality equity stories. In addition, owners and the C-suite of IPO bound companies continue to face volatile markets. They will need to prepare early and have a holistic approach to be IPO-ready in order to act quickly when narrow IPO windows open.”

2020 outlook: more robust IPO activity, particularly in the first half of the year

Looking ahead, several uncertainties will subside in 2020. Trade tensions between the US, China and the EU; the outcome of Brexit; and uncertainty with respect to the stability some European economies will fade in early 2020 and will positively impact overall IPO sentiment.

A healthy pipeline of IPO candidates means that within the right transaction window, IPO activity will pick up across all regions, particularly in the Americas where a number of large unicorns are expected to launch their IPOs in the US in the first half of 2020. This should see 2020 deal numbers exceed 2019 levels.