The IPO market isnt off to a flying start this year.
The first half of the year has been a late bloomer in terms of new IPO activity, but markets are now beginning to see spurts of growth. This is according to Baker McKenzie latest Cross-Border IPO Index, which found that capital raised in the global IPO market fell by 37%, with volume dipping 34% comparatively on last year.
A total of US$69.8 billion was raised across 514 deals.
Continuing and recent geopolitical events, such as the US government shutdown, the Sino-US trade tensions and increased Brexit uncertainty impacted activity in some areas. Despite these external factors, there is a strong undercurrent of positive sentiment among issuers, the firm wrote in the report.
Domestic miss
The total amount of domestic capital raised globally fell by 32% to US$58.5 billion, while the number of IPOs recorded fell by 37% to 429. North America was the only region to show an increase in capital raised, up 13%.
Once again the majority of cross-border IPOs in the first six months of 2019 were in Asia Pacific and accounted for 80% of the total cross-border capital raised and 75% of listings. Within that, China remained the most active domicile for cross-border issues, and much of the remainder of cross-border IPO activity came from North America, where USD 3.5 billion was raised, a fall of 62%.
Cross-border deals falter
Global cross-border IPO activity faltered in the first half of 2019, with total value down 55% to US$11.3 billion and volume down 16% with 85 listings recorded. The majority of cross-border IPOs in the first six months of 2019 were in Asia Pacific, accounting for 80% of total cross-border capital raised and 75% of listings. China remained the most active cross-border issuer. Much of the remainder of cross-border IPO activity came from North America where US$ 3.5 billion was raised, a fall of 62%.
Mega deals decline
A total of 10 mega IPOs were recorded in the first half of 2019 raising US$ 24.3 billion, in contrast to 18 mega IPOs recorded in the same period in 2019, raising US$40 billion with steeper declines in capital raising compared to volume of listings. That is in contrast to the same period last year when 18 mega IPOs had been recorded raising USD 40 billion, with steeper declines in capital raising compared to volume of listings.
The underperformance of some mega IPOs and the subsequent pricing and valuation concerns among investors prompted something of a ‘wait-and-see’ approach – as issuers held off listing in the early months for the market to settle into more favorable conditions, the report said. With the market starting to recover, one thing that we can expect to see in the second half of the year as a result of these concerns and underperformances, is more conservative pricing among larger listings in particular.
Sector highlights
Financials was the sector with the largest amount of capital raised in the first half of 2019, buoyed by four listings over US$ 1 billion.
Transportation was a major theme in the Technology sector during the first six months of 2019 as two of the worlds biggest tech names – Uber and Lyft – listed in the US.
Uber was responsible for the NYSE retaining its top spot on the leader board of exchanges by capital raised, with the tech companys USD 8.1 billion listing keeping Nasdaq in second place, Baker McKenzie noted.
And speaking of the NYSE, capital raised on the bourse reached US$20.1 billion, a fall of 3% year-on-year, while US$ 15.2 billion was raised on Nasdaq, down 4% on the first half of 2018, but up 116% on the same period in 2017.
Abroad, the National Stock Exchange of India was one of the few to record an increase in capital raised, up 359%,with the Korea Exchange and Saudi Arabia’s Tadawul also showing increases of 80% and 221%, respectively. Italys Borsa Italiana recorded an uptick in capital as a result of the payment service company Nexis USD 2.27 billion IPO.
