Delayed but not derailed: global IPO market looks ahead to 2017

UntitledAmid ongoing economic and political uncertainty, the global IPO market will continue to be a stop-start affair in 2016. However, greater clarity regarding the economic and political landscape will emerge by the end of the year, allowing companies to reinvigorate their IPO strategies, while the recent growth in the availability of private capital will continue to support a pipeline of larger and more mature businesses.

Global IPO activity picked up in 2Q16 with a total of 246 IPOs raising US$29.6b. This represents a 29% rise in volume and a 120% increase in total capital raised compared with 1Q16, which had been by far the weakest first quarter since 2009.

However, even after this quarter’s improvements, IPO activity at the mid-year point remains significantly lower than the same period last year. For the first six months of 2016 (2Q16 YTD), there were 437 IPOs raising a total of US$43.0b, a decrease of 38% and 61% respectively on the same period in 2015. Despite a slow 1Q16, global IPO activity in 2Q16 YTD still exceeded that of the first half of 2013 (which saw the lowest six-month activity since 2009).

In the first half of 2016, Asia-Pacific exchanges continue to lead global IPO activity, capturing 52% of global IPOs, followed by EMEIA and US exchanges which accounted for 36% and 10.3% of global deals, respectively. EMEIA exchanges led by capital raised with 44% of global proceeds, while Asia-Pacific and US exchanges captured 40% and 16% of global capital raised, respectively.

In the short-term, global IPO activity is likely to continue to be impacted by concerns regarding the direction of interest rates, particularly in the US, the UK’s decision to leave the EU and the US presidential election in November. However, once these sources of volatility stabilize, the outlook should be a lot more positive, supported by healthy pipelines of IPO-ready companies in many key regions and across many sectors.

Read more in our report, EY Global IPO Trends 2016 2Q.

EY Legal Services contacts:

Richard Norbruis – EY Global Transaction Law Leader & Law Sector Leader for Private Equity

Rutger Lambriex – EY Global Corporate Law Leader

For Brexit-related legal advice, Phil McDonnell – EY Executive Director