Strong global IPO activity in Q1: EY

Global initial public offering (IPO) activity got off to a strong start in the first quarter of 2017, led by market gains in Asia-Pacific and the US hosting the first two megadeals of the year.

The first technology megadeal of the year that raised US$3.4 billion (S$4.8 billion) was from the US IPO of Snap Inc, parent company of Snapchat.

In advisory service company EY's quarterly report, Global IPO Trends: Q1 2017, it said that Snap Inc and the US$1.8 billion listing of Invitation Homes Inc helped ensure the New York Stock Exchange as the most active exchange by proceeds in Q1 2017.

Asia-Pacific, led by China, dominated global IPO activity in Q1 2017, accounting for 70 per cent of the global number of IPOs and 48 per cent by global proceeds.

China exchanges were the busiest, hosting 182 IPOs, with the Shenzhen and Shanghai exchanges being most active and accounting for 20 per cent (73 IPOs) and 19 per cent (70 IPOs) of the global number of IPOs respectively.

A total of 369 IPOs raised US$33.7 billion in the first three months of 2017.

According to EY, this is a 92 per cent year-over-year increase in the global number of IPOs and a 146 per cent increase in global proceeds.

The first quarter of 2017 was the most active first quarter by global number of IPOs since Q1 2007, with 399 IPOs raising US$47.5 billion.

Martin Steinbach, EY Global and EY EMEIA IPO leader, said: "In the face of sustained global economic uncertainty, the first quarter of this year has set the stage for accelerated growth in 2017.

Equity index performance and valuations are trending upward, with several major indices reaching all-time highs."

While IPO activity is likely to increase in China and selected ASEAN exchanges during the second and third quarters, EY said there may be a slowdown in new listings in other markets and there may be a temporary drop in activity, but it is expected to rebound in the final quarter of the year.

Max Loh, EY ASEAN and Singapore managing partner, Ernst & Young LLP, said that IPO activity in Asia-Pacific has been powering ahead due to the region's relative insulation from political uncertainty elsewhere in the world, ample liquidity in emerging markets and strengthening investor sentiment on the back of reduced volatility and steady stock market gains.

He said that investor confidence appears robust in ASEAN, where the region saw a four-fold increase in funds raised at US$1.3 billion compared with the same quarter in 2016.

On the outlook for the Singapore IPO market, he said: "Although other forms of fundraising, such as crowdfunding and private equity, are viable alternatives for capital-raising and expansion, local entrepreneurial companies ultimately have a preference for a Singapore listing as a platform for growth."

This article was first published on April 7, 2017.
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