Global IPO markets nearly standstill amid escalating Covid-19 pandemic
Initial public offering (IPO) markets worldwide ended with a close-to-standstill March, according to EY
Initial public offering (IPO) markets worldwide, which started strongly in the first quarter of 2020 (1Q20) with an active January and February as they rode on the momentum seen in 4Q19, ended with a close-to-standstill March, amid the escalating Covid-19 pandemic.
Nevertheless, from a relatively low base in 2019, IPOs in 1Q20 performed better year-on-year (y-o-y), with an 11% increase in deals to 235, and an 89% jump in proceeds raised to US$28.5 billion (RM123.98 billion), according to global business solutions and advisory provider EY.
“Riding the strong tailwinds from 4Q19, global IPO markets started off strongly in the first two months of 2020. However, unexpected and novel events surrounding Covid-19 took a toll on the global health of equity markets and, together with other global market factors, have caused market turbulence last seen only during the global financial crisis of 2008.
This extreme market volatility makes any ambitions to go public highly uncertain, in timing and valuation, said EY global IPO leader Paul Go in a statement yesterday.
Asia-Pacific accounted for 160 of those deals, raising US$16.8 billion in proceeds — up 28% and 110% respectively from a year ago. The region’s raising of funds accounted for 68% of deals worldwide and 59% of proceeds, it said.
This was followed by the Americas — with 14% more IPOs y-o-y at 40 and proceeds raised climbing 47% to US$8.2 billion — and Europe, the Middle East, India and Africa recording 31% less IPOs at 35, but with a 133% jump in proceeds to US$3.5 billion.
Southeast Asia saw 31 IPOs, with US$3 billion raised — a 63% jump in deal volume and 885% in proceeds. The significant increase in IPO proceeds was mainly due to Central Retail Corp — the largest IPO ever on the Stock Exchange of Thailand (SET), said EY.
In deal numbers, Indonesia led with 18 IPOs, followed by Malaysia (six IPOs), Singapore (five) and Thailand (two).
Exchanges in Thailand (the SET and Market for Alternative Investment) and Singapore (the Singapore Exchange and Catalist), raising US$2.3 billion and US$500 million respectively in the quarter, are among the top 12 exchanges globally by proceeds, EY’s statement read.
In the early part of the quarter, IPO activities from 4Q19 carried over with deals across various markets in Southeast Asia. This has been somewhat put paid by Covid-19, devastating economies, businesses and communities the world over, EY Asean IPO leader Max Loh said.
Economic and fiscal packages are being put together to stabilise economies. These and other effects on market volatility and investor confidence will be key metrics in determining the IPO momentum, Loh added.
Looking ahead, EY said Covid-19’s chilling effects will impact markets for the foreseeable future.
Given the Covid-19 outbreak and its negative impact on global economic activities, IPO markets are not expected to quickly rebound in 2Q20.
However, while 3Q is typically a slower period of the year, there may be increased IPO activities as the market attempts a reset and the global pipeline looks for the IPO window, its statement added.
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