IPO investors enjoyed a prosperous 2020 as IPO activity proved resilient to the impact of the current pandemic supported by low interest rates and expansionary monetary policies, said EY recently.
Global IPO volumes continued to accelerate, increasing by 19% to 1,363, while proceeds increased 29% year-on-year to a total of US$268 billion, according to the EY Global IPO Trends: Q4 2020 report.
- The Americas region saw the biggest year-on-year increase in both IPO volumes and proceeds, with IPO numbers in 2020 increasing 30% to 282, and proceeds rising 78% to US$97.9 billion, the report states.
- Asia-Pacific also made significant gains recording a 20% increase in IPO volumes to 822 IPOs and 45% in proceeds to US$136.2 billion.
- In EMEIA (Europe, Middle East, India, and Africa), while IPO numbers rose 7% to 259 IPOs, proceeds fell 43% to US$33.9 billion.
- Overall, 2020 saw a steady increase in cross-border IPO volume, accounting for 7.9% of global IPOs and 10% by proceeds, compared with 8% and 7.1% in 2019 respectively.
- The technology sector maintained its lead by both volume and proceeds finishing the year with 324 IPOs and US$89.1b respectively.
- By IPO number, industrials followed in second place with 243 IPOs and US$31.4 billion, and then health care with 235 IPOs and US $50.4 billion in proceeds.
AsiaPacific markets remain strong
Asia Pacific saw the highest proceeds since 2010, EY pointed out.
Industrials led the sectors with 181 IPOs raising US$20.8 billion in proceeds, followed by technology with 180 IPOs and US$38.7 billion in proceeds, and materials, which saw 95 IPOs raising US$7.4 billion, the firm said.
Greater China accounted for three of the top five exchanges globally, according to the report.
With investor sentiment remaining positive in Q4 2020, Greater China saw an acceleration in both IPO volumes and proceeds, garnering US$119.1 billion via 536 IPOs in total, the report adds.
Japan’s startup ecosystem continued to drive growth as well in Q4 2020, seeing a modest 4% (93) increase in IPOs and 13% (US$3.3b) decline in proceeds through 2020.
Q1 2021 outlook: markets should sustain momentum
As COVID-19 vaccine availability keeps spirits high and companies take advantage of ample liquidity, global IPO markets should remain healthy and will likely sustain momentum going into the first half of 2021, EY noted.
From a geopolitical perspective, the agreed Brexit deal favors positive IPO market sentiments as agreements between the EU and the UK continue to take shape, EY said.
While the window of opportunity remains open, IPO candidates should remain vigilant for proposed regulatory changes, a potential market correction stemming from increases in pricing volatility and the pace at which the world recovers from the COVID-19 pandemic, EY advised.
“Looking to the first half of 2021, continued fiscal stimulus, abundance of liquidity and optimism linked to COVID-19 vaccines should sustain IPO momentum,” said Paul Go, EY Global IPO Leader. “However, investors should beware of any potential market correction, especially for those companies that have seen their share prices make substantial gains from the market rally in 2020.”