Despite geopolitical uncertainties and market volatility, global IPO activity in the first three months of 2018 posted strong results to start the year. Global IPO markets raised $42.8billion in first-quarter (Q1) 2018, a 28percent year-over-year (YoY) increase on Q1 2017.
However, with 287 listings this quarter, volume was down 27percent YoY compared with Q1 2017, when it produced the highest number of listings for first quarter IPOs since 2007. These and other findings were published in the EY quarterly report, Global IPO trends: Q1 2018.
“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”, said Martin Steinbach, EY Global and EMEIA IPO Leader.
“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. 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,” Steinbach stated.
In the remaining part of 2018, the outlook for IPO looks to be promising, driven by strong equity markets and sound corporate earnings. This is despite expected interest rate hikes later this year and uncertainty around potential trade policies. Steady investor confidence is encouraging a healthy pipeline across sectors and markets this year.
Americas IPO activity started out on a high in the only region up over Q1 2017 in terms of proceeds and number of deals. There were 44 IPOs in the Americas in Q1 2018 raising $15.4billion, an increase of 29percent in terms of volume and 22percent by proceeds compared to Q1 last year.
US IPO activity accounted for 36 IPOs raising US$12.8b, up 44percent in terms of volume and 17percent by proceeds compared with Q1 2017. Additionally, five of the top ten global deals were featured in the US. Three of the top ten deals on US exchanges were also cross-border. In total, US exchanges accounted for 41percent of all global cross-border activity in Q1 2018 compared to 35percent in Q1 2017.
“The first quarter of 2018 built strong momentum for the US IPO markets. Both the volume of deals and capital raised are significantly up from recent years, in large part due to strong performances to start the year in January. Positive IPO performance to date provides a strong backdrop for continued issuance, though potential uncertainty surrounding mid-term elections could present risk in the second half of the year,” said Jackie Kelley, EY Americas IPO Markets Leader.
