The impact of COVID-19 has cut the global IPO momentum short in the first half of 2020, according to a new quarterly report by EY, Global IPO Trends: Q1 2020.
The impact led to 235 deals and $28.5 billion in proceeds through the first three months of the year. IPOs in Q1 2020 performed better than they did in Q1 2019, with increases seen in the number of deals and proceeds by 11% and 89%, respectively.
The quarter, the report found, represents two extremes: an active January and February and a nearly-standstill March. The markets in Asia-Pacific (160 deals raising $16.8 billion in proceeds) and the Americas (40 IPOs raising $8.2 billion) ended the quarter ahead compared to last year by both deals and proceeds, while EMEIA (35 IPOs raising $3.5 billion) decreased by deal number. The industrial sectors dominated the quarter, with 45 IPOs raising $6.3 billion. In terms of deal numbers, technology (40) and health care (30) were highly active.
“Riding the strong tailwinds from Q4 2019, the global IPO markets started off strongly in the first two months of 2020. However, the 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, both in terms of timing and valuation,” Paul Go, global IPO leader for EY, said.
In the first quarter of 2020, the Americas had a 47% increase in proceeds, or $8.2 billion, and a 14% increase in deals to 40, compared to the same period last year. U.S. exchanges accounted for the majority of activity, with 60% by deal number (24 IPOs) and 89% by proceeds ($7.3 billion).
“IPO activity across the Americas saw a rise in Q1 2020 by volumes and proceeds compared with Q1 2019. While COVID-19 and oil tensions have largely dried up IPO activity for now, IPO preparation continues and the IPO pipeline is growing, as issuers look for opportunities to be prepared for calmer and more conducive markets,” Jackie Kelley, Americas IPO leader for EY, said.
EY, which has a major presence in New Jersey, said IPO markets are not expected to quickly rebound by Q2 2020. However, the third quarter of the year is typically slower in general, so there may be increased activity as the market attempts to reset.