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Capital raised from IPOs down 70% amid economic uncertainty

A report by EY shows a slowdown in global IPO deals in 2016 with 39 per cent fewer deals compared to Q1 2015. The quarterly EY Global IPO Trends: 2016 1Q found that 167 deals were registered in Q1 2016, raising US$12.1bn. However, this is the slowest first quarter since 2009 and the total capital raised is down 70 per cent compared to the same period last year.

Issuers using 'wait-and-see' approach

The report found that deal sizes are getting smaller and the main reason is market volatility and uncertainty, fuelled by fears of a global economic slowdown, falling oil prices and the current equity market turbulence. According to EY, issuers are choosing to wait for market conditions to improve, while some are looking at alternatives to an IPO.

The number of private equity- and venture capital-backed IPOs are down 80 per cent in Q1 2016 compared to Q1 2015. Technology IPOs were also down 24 per cent over the same period, while in the US there were no IPOs in this sector in the first quarter.

Healthcare and tech lead IPO market

The report also found that:

  • Private equity- and venture capital-backed IPOs accounted for 6 per cent of global IPOs in Q1 2016 (10 deals in total) but they made up 17 per cent in terms of proceeds (US$2bn).
  • Rapid growth markets represent 53 per cent of global IPO volume in Q1 2016.
  • Three sectors dominated: healthcare (29 deals – US$1.4bn); technology (29 deals – US$0.9bn); and industrials (24 deals – US$1.5bn).
  • There were 35 withdrawn or postponed deals in Q1 2016. In Q1 last year there were 39.
  • The majority of IPOs (96 per cent) in Q1 2016 priced within or above expectations.

Top three IPOs in Q1 2016

The top three deals and their provenance in Q1 2016 were:

  1. China Zheshang Bank (US$2.0bn) - China
  2. LaSalle Logiport REIT (US$872m) - Japan
  3. Metro Bank plc (US$613m) - UK

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