Ongoing geopolitical uncertainties and trade issues continue to dampen investor enthusiasm, with the number of IPOs in the first nine months of this year falling to 1,000 globally, an 18 percent decrease from 2017, says a report by EY.
The number of initial public offerings (IPOs) in the first nine months of 2018 fell to 1,000 globally. This is an 18 per cent decrease from year-to-date (YTD) 2017, which saw the highest nine-month activity since 2007.
"However, despite this slowdown, YTD 2018 activity remained above the 10-year average with global IPO markets raising $145.1 billion, a 9 percent increase year-on-year," according to the EY quarterly report titled, "Global IPO trends: Q3 2018".
Activity in Q3 2018, with 302 IPOs and proceeds of $47.1 billion, was 22 percent lower in deal volume and 9 per cent higher by proceeds compared with Q3 2017, the report said.
"Technology, industrials and health care sectors were the most prolific producers of IPOs globally in year-to-date 2018, together accounting for 468 IPOs (47 percent of global IPO by deal numbers) and raising $62.9 billion altogether (43 percent of global proceeds)," it added.
As per the report, an increase in unicorn (start-up) IPOs in Q3 2018 pushed 2018 global IPO proceeds 9 percent above 2017.
"The third quarter has lived up to expectations as the quietest period of the year with the global IPO market feeling the full force of geopolitical tensions, trade issues between the US, EU and China and the looming exit of the UK from the European Union.
"However, if mega deals characterised the first half of 2018, the rising phenomenon of IPOs by unicorn companies is shaping up to drive the global IPO agenda through the second half of 2018, and we anticipate that 2018 global proceeds will surpass 2017 numbers as a result. Overall deal volumes in 2018, however, will likely be lower year-on-year than in 2017," said Martin Steinbach, EY Global and EMEIA IPO Leader.
The report further said that America's IPO activity remained strong in YTD 2018, with deal proceeds increasing 41 percent to $50.1 billion and deal numbers rising by 27 percent to 195 IPOs.
The US saw 47 IPOs in Q3 2018 raising $11.9 billion, an increase of 150 percent by proceeds and 31 per cent by volume compared with Q3 2017.
In Asia-Pacific, Hong Kong was the leading story despite cooling activity in the region. Hong Kong's IPO market experienced sharp spikes in Q3 2018 by both deal number and proceeds, with 18 per cent of IPOs and 49 percent of global proceeds.
Hong Kong was also the world's second most popular destination for cross-border IPOs, behind only the US, the report by the assurance, tax, transaction and advisory services firm said.
In Europe, Middle East, India and Africa (EMEIA), deal volumes and proceeds were down substantially from Q3 2017.
EMEIA's Q3 2018 IPO activity was 48 percent and 85 percent lower, respectively than Q3 2017 in terms of number of deals and proceeds. EMEIA 2018 YTD activity was also down, with deal volume and proceeds falling 11 per cent and 24 percent, respectively, on 2017 YTD, the EY quarterly report said.
However, the region ranks as the second largest and sustainable global IPO market by number of IPOs representing an increased share of 33 percent, the report added.