According to consulting firm EY, the impact of the COVID-19 pandemic continued to play a significant role in declining IPO activity in the first half of 2020. Overall, Q2 2020 saw a decline in IPO activity from Q2 2019 across all regions by deal numbers and for the Americas and EMEIA by proceeds.
A new report reveals that not unexpectedly, global IPO activity slowed dramatically in April and May, with a 48% decrease by volume (97 deals) and a 67% decrease in proceeds (US$13.2billion) compared to April and May 2019.
This dragged down 1H 2020 regional activities compared with 1H 2019 and overall YTD deal volume (419 deals) and proceeds (US$69.5 billion) decreased 19% and 8%, respectively, from YTD 2019.
Despite a late flurry of deals in June, global IPO activity was sluggish on Americas and EMEIA stock exchanges YTD, while Asia-Pacific IPO activity increased.
Americas deal volume (81 deals) and proceeds (US$24.5 billion) both fell by 30% compared with YTD 2019, while EMEIA IPO deal volume (68 deals) and proceeds (US$10.1 billion) fell 50% and 44%, respectively.
Asia-Pacific IPO activity rose 2% by deal numbers (270 deals) and rose 56% by proceeds (US$34.9 billion) compared with YTD 2019. The technology, industrials and health care sectors dominated in YTD 2020. Technology saw 87 IPOs raise US$17.2 billions, industrials saw 83 IPOs raise US$9.6b and health care had 76 IPOs that raised US$15.9b.
These and other findings were published in the EY quarterly report, Global IPO trends: Q2 2020.
"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,” said EY global IPO leader Paul Go. “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."
In the Americas, U.S. exchanges still accounted for the majority of IPOs in the first half of 2020, with 79% by deal volume (64 deals) and 91% by proceeds (US$22.3 billion); this included five unicorn IPOs.
The health care and technology sectors continued to have the highest level of IPO activity in the U.S. during the reporting period, representing 55% and 25% by deal volume, respectively. The health care sector dominated in proceeds (US$10.2 billion), contributing 46%, from 35 IPOs.
The Mexican stock exchange posted one IPO valued at US$1.1b, making it the eighth-largest IPO globally in Q2 2020.
“With stock prices rebounding and market sentiment improving, we are seeing signs of recovery in the IPO market,” said Jackie Kelley, EY Americas IPO leader. “Over a third of the IPOs in the first half of 2020 occurred in June. IPO pipeline continues to build as issuers look to go public in the second half of 2020 or early 2021.”