Trade issues dampen global initial public offerings activity

Ongoing geopolitical uncertainties and trade issues continue to dampen investor enthusiasm, with the number of IPOs in the first nine months of this year falling to 1,000 globally, an 18 per cent decrease from 2017, says a report by EY.

The number of initial public offerings (IPOs) in the first nine months of 2018 fell to 1,000 globally. This is an 18 per cent decrease from year-to-date (YTD) 2017, which saw the highest nine-month activity since 2007.

“However, despite this slowdown, YTD 2018 activity remained above the 10-year average with global IPO markets raising $145.1 billion, a 9 per cent increase year-on-year,” according to the EY quarterly report titled, “Global IPO trends: Q3 2018.” Activity in Q3 2018, with 302 IPOs and proceeds of $47.1 billion, was 22 percent lower in deal volume and 9 per cent higher by proceeds compared with Q3 2017, the report said.

“Technology, industrials and health care sectors were the most prolific producers of IPOs globally in year-to-date 2018, together accounting for 468 IPOs (47 percent of global IPO by deal numbers) and raising $62.9 billion altogether (43 percent of global proceeds),” it added.

As per the report, an increase in unicorn (start-up) IPOs in Q3 2018 pushed 2018 global IPO proceeds 9 per cent above 2017.The third quarter has lived up to expectations as the quietest period of the year with the global IPO market feeling the full force of geopolitical tensions, trade issues between the US, EU and China and the looming exit of the UK from the European Union.

“However, if mega deals characterised the first half of 2018, the rising phenomenon of IPOs by unicorn companies is shaping up to drive the global IPO agenda through the second half of 2018, and we anticipate that 2018 global proceeds will surpass 2017 numbers as a result. Overall deal volumes in 2018, however, will likely be lower year-on-year than in 2017,” said Martin Steinbach, EY Global and EMEIA IPO Leader.

In Europe, Middle East, India and Africa (EMEIA), deal volumes and proceeds were down substantially from Q3 2017. EMEIA's Q3 2018 IPO activity was 48 per cent and 85 per cent lower, respectively than Q3 2017 in terms of number of deals and proceeds.