Global initial public offerings (IPO) appear to be on the cusp of comeback, with activity off to a healthy run in the first quarter (Q1) of 2017, according to the latest quarterly outlook report from Ernst & Young LLP (EY).
After a sluggish showing in 2016, some 369 IPOs worldwide raised US$33.7 billion within the first three months this year, representing a 92% year-over-year increase in deals closed and 146% increase in proceeds. It also marks the most active Q1 since 2007.
That’s in stark contrast with the cool down in the IPO market in Q1 2016, when 167 deals raised just US$12.1 billion — a 70% drop in capital raised from the year before.
Read: EY Global IPO Trends 2016 1Q
Despite widespread geopolitical uncertainty, the report suggests this “brisk start” bodes well for the year ahead, with eyes focused on China and the U.S., which led the pack of deals in Q1.
“In the face of sustained global economic uncertainty, the first quarter of this year has set the stage for accelerated growth in 2017,” says Martin Steinbach, EY Global and EY Europe, Middle East and Africa IPO leader, in a statement. “Equity index performance and valuations are trending upward, with several major indices reaching all-time highs. Concurrently, volatility is low, underpinning positive IPO sentiment.”
Attention will be fixed on Asia-Pacific, particularly China, with many expecting that its securities watchdog, China Securities Regulatory Commission, will tackle its backlog of listings to pave the way for more IPO approvals to pass over the course of the year.
Still, the report notes, public debuts were spread out across the region, with 27 new listings in Japan, 23 in Australia, 14 in Southeast Asia and 12 in South Korea.
Although the U.S had only 24 of the 369 IPOs, its listings accounted for close to a third ($US10.8 billion) of the total capital raised, with four cracking the top 10 deals.
Globally, much of the IPO activity in Q1 stems from consumer products and staples, which, accounted for 20.9% of deals combined.
“This positive performance should attract more tech and unicorns to the public markets and further open the door for other sectors such as retail, energy, and real estate,” says Jackie Kelley, EY Americas IPO markets leader, in a statement. “With the market currently insulated from the political uncertainty, more companies are expected to entering the filing process.”
EY’s report also echoes a recent assessment from PricewaterhouseCoopers LLP of Canada’s IPO market during Q1, which suggests a positive outlook for the nation. So far, a spate of new listings have raised a total of $571 million, compared with just $600,000 during Q1 2016.
Read: Dramatic bounce back in Canada’s IPO market
Even Europe, the Middle East and Africa — whose countries are bracing for a host of elections this year — saw moderate growth in IPO filings, which increased slightly by 8.5% year-over-year, according to the EY report.
EY’s report draws on data from Dealogic, which includes all new listings up to March 24.
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