There’s been a surge in companies across the globe launching on stock exchanges amid the COVID-19 pandemic this year, with technology outfits leading the way, raising more than US$53 billion through new IPOs.
That’s according to EY’s latest Global IPO trends report, which suggests companies are choosing to go public to shore up their capital base for future investments and remain resilient against a potential next wave of the pandemic.
Globally, the technology sector saw 210 initial public offerings (IPOs) raise US$53.9 billion, 168 IPOs across industrials raise US$23.3 billion, while healthcare saw 159 IPOs raise US$33.3 billion in the year to date.
The global figures reveal the third quarter of 2020 has been the most active third quarter in the last 20 years by proceeds, and the second highest by deal numbers.
In the year to date, IPO activity has accelerated, with a 14 percent jump in the total number of IPOs to 872, and a significant 43 percent increase in proceeds, totalling US$165.3 billion.
EY Global IPO Leader, Paul Go says the trend looks set to continue.
“Although the market sentiments can be fragile, the scene is set for a busy last quarter to end a turbulent 2020 that has seen some stellar IPO performance,” he says.
“The US presidential election, as well as the China-US relationship post-election, may be the key considerations in future cross-border IPO activities among the world’s leading stock exchanges.
“Despite the uncertainties, companies and sectors that have adapted and excelled in the ‘new normal’ should continue to attract IPO investors.”
Asia-Pacific led the way, with 554 IPOs, raising US$85.3 billion, increasing by 29 percent and 88 percent, respectively from the same time period last year.
The report indicates that activity in the region increased in part due to COVID-19 pandemic-related government stimulus policies.
The reports states that in greater China, Q3 2020 IPO activities are on track to hit historic highs with deal numbers and proceeds up 152 percent and 139 percent, respectively year-on-year, while the market in Japan has also intensified, with a 67 percent increase in numbers and 40 percent rise in proceeds YTD.
EY Asia-Pacific IPO Leader, Ringo Choi says the robust IPO activity suggests that Asia-Pacific companies are choosing to protect their value through capital markets in preparation for a worst-case scenario.
“IPO candidates are seizing opportunities to go public to shore up their capital base for future investments and remain resilient against a potential next wave of the pandemic,” he says.
“The strong valuations seen in some of the recently listed ‘new economy’ companies and those not impacted by the pandemic are giving positive signals to other potential IPO candidates looking to complete their transactions in the quarters ahead.”
IPO activity in the Americas saw 188 deals raise US$62.4 billion in proceeds, increasing 18 percent and 33 percent year to date.
Meanwhile, IPO markets in Europe, the Middle East and Africa ramped up in Q3 2020 with deal numbers increasing 34 percent, and proceeds rising 49 percent compared to the 2019 third quarter.