EY: What are the driving trends in today´s Global and regional IPO markets

16. Okt 2017

EY: What are the driving trends in today´s Global and regional IPO marketsBy Dr. Martin Steinbach, Global and EMEIA IPO Leader, EY

Dr. Martin Steinbach

Executing a company growth strategy requires access to capital. One of the primary ways to get funding is to go public with an IPO. Despite turbulent times and unpredictable markets, IPOs are taking place all over the world.

Global IPO market performance is on course for best year since 2007

The global IPO market has continued to build strong momentum and results through September show that IPO volume has already exceeded the full-year totals for 2016. We saw ytd a healthy increase of 59% by number of IPOs and 55% by proceeds compared with the same period last year. Global IPO markets exhibit a rich diversity of geographies, industries and types of companies. In the last decade alone the size of the global IPO market has seen record highs even with fluctuations from between a low of 565 to a high of 1,365 IPOs with IPO proceeds of US$101b up to U$284b annually. With broader macroeconomic trends and external shocks mainly impacting regional IPO sentiment, IPO activity in main and junior markets is cyclical and impacted by major external shocks, driving volatility and slowing down IPO activity globally.


Globally, financial sponsor-backed IPOs continue to fall as a proportion of all deals with 10% in the first nine months of 2017 compared with 14% in the prior year. Investor appetite is on industrials, technology and consumer products sectors. We are seeing start-ups looking at alternative ways of raising capital, such as initial coin offerings. In response we are noticing a growing worldwide trend of relaxation of IPO regulations making it easier for IPO candidates to go public.

Highlights from the regional IPO markets

Over the past years we’ve seen structural changes in market shares of main IPO regions. There is a trend toward Asia-Pacific as the global IPO engine room. The region leads in terms of volume and proceeds, accounting for 60% of IPOs worldwide and 43% of all global proceeds, and emerging markets continue to fill the global pipeline. Asia-Pacific also tightens its grip in Q3 2017 and IPO activity increased by 72% to 690 IPOs, while capital raised is up 28% to US$53.9b. Solid economic fundamentals, plus government action to support markets and economies in countries like China, Singapore, Australia and Japan, should keep listings strong.
Americas upbeat with activity across the region: 57% by number of IPOs and a 151% increase in proceeds and the US continues to see a surge in momentum with proceeds up 89% and the number of IPOs up 35% ytd.

EMEIA gears up for Q4 with year-on-year gains and consolidated its position as the world’s second busiest region of the year due to 74 IPOs raising US$10.3b in Q3 2017. This is an improvement of 16% by volume and 63% by proceeds ytd. The region saw four US$1b+ deals in Q3 2017, spread across India, Poland, South Africa and Switzerland. These included the world’s largest IPO of the quarter, the listing of Landis+Gyr Holding AG on the Swiss Exchange (SIX), which raised US$2.4b in July. Current returns of IPOs on the EMEIA main markets have outperformed the main indices, which reflects positive investor sentiment.

Positive Outlook with global IPOs on course for the busiest year since 2007

Given the strengthening IPO sentiment with relative low volatility and valuations at high levels, we expect the busiest IPO quarter of the year. Liquidity is ample and economic fundamentals are improving in most markets. Building on a relatively healthy economic environment, rising equity markets and confidence across the region, European IPO activity should be relatively strong going into the last quarter of the year, while India and the Gulf States are beginning to line up and take their turn before the end of the year. In this environment the top five IPO success factors for IPO candidates meeting international investor demands remain: right mangement team, right story, right price, right timing and being IPO ready.
However, tensions in the Korean Peninsula and other geopolitical uncertainties could create bumps in the IPO road ahead. Potential impacts for IPO bound companies are:

  • Consider a number of alternative funding or exit options
  • Preserve optionality with early IPO readiness preparations
  • Prepare early to complete your IPO quickly in narrow IPO windows
  • Be flexible in timing and pricing

We expect a year-end rally in the fourth quarter with strong momentum for 2018. For German IPOs we are keeping our estimate with 10-15 IPOs in 2017. Globally final numbers for 2017 could fall in the range of 1,600 to 1,700 IPOs and US$190b to US$200b in capital raised, and this would mark 2017 as the best year for global IPO performance since 2007.

Keeping options open in M&A and IPO markets to maintain the pace of growth

Companies that have completed a successful IPO know the process involves the complete transformation of the people, processes and culture of the organization from a private enterprise to a public one. Before settling on the IPO journey to growth capital, most IPO candidates and PE firms explore alternative exit and funding strategies. By taking a dual-track approach in parallel, M&A and IPO markets expand a company’s strategic options, improves negotiating leverage and reduces execution risk. Following this strategy, around 12% of all PE- held portfolio companies were exited by an IPO globally.

However, companies around the world continue to ready themselves to go public.
When the market timing is right, it’s the companies that are fully prepared that are best able to fully leverage and capture the windows of opportunity. Providing access to the deep pool of global capital is essential to fund growth and innvovation, and it is creating jobs for businesses and economies. Stock exchanges around the world continue to play a pivotal role in this value journey of IPO candidates being an important part of the whole IPO ecosystem.

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EY publishes a quarterly review of worldwide IPO activity, a regular snapshot of the changing primary market. To read more from EY’s quarterly Global IPO trends report, and other insights, please visit http://www.ey.com/gl/en/services/strategic-growth-markets/ey-going-public or follow Martin on social media or #IPOreport.