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EY: Strong Q4 IPO Activity Demonstrates Resilience, Defies Expectations

EY: Strong Q4 IPO Activity Demonstrates Resilience, Defies Expectations

Despite the uncertainty of 2020, IPO investors enjoyed a prosperous year as IPO activity proved resilient to the impact of the COVID-19 pandemic supported by low interest rates and expansionary monetary policies. Global IPO volumes continued to accelerate, increasing by 19% to 1,363, while proceeds increased 29% year-on-year to a total of US$268b. This strong IPO performance indicates global equity markets continue to provide the platform for companies with access to public capital.

 

The technology sector maintained its lead by both volume and proceeds finishing the year with 324 IPOs and US$89.1b respectively. By IPO number, industrials followed in second place with 243 IPOs and US$31.4b, and then health care with 235 IPOs and US $50.4b in proceeds. These and other findings were published in the EY quarterly report, EY Global IPO Trends: Q4 2020.

 

The Americas IPO market adapted for resilience in 2020

Americas IPO momentum remained positive in Q4 2020, finishing the year with 282 IPOs raising US$97.9b, a respective increase of 30% and 78% year-on-year. The health care sector remained strong with 40% of total deals taking place in the region, seeing 114 IPOs raise US$27.9b during 2020. The technology sector followed with 77 IPOs raising US$40.4b and industrials, which saw 19 IPOs raise US$8.0b in 2020.

 

Asia-Pacific markets remain strong in face of COVID-19 pandemic

Despite a challenging year, 2020 activity in the Asia-Pacific region surpassed 2019, increasing 20% (822) by volume and 45% (US$136.2b) by proceeds in 2020. In fact, the region saw the highest proceeds since 2010. Industrials led the sectors with 181 IPOs raising US$20.8b in proceeds, followed by technology with 180 IPOs and US$38.7b in proceeds, and materials, which saw 95 IPOs raising US$7.4b.

 

Europe, Middle East, India and Africa’s (EMEIA) IPO candidates took advantage of the open window of opportunity

EMEIA gained momentum in Q4 2020 despite the second wave of the COVID-19 pandemic sweeping through the region. Through 2020, EMEIA saw 259 IPOs raise US$33.9b in proceeds, a 7% rise and 43% decline respectively.

 

In Europe, the market continued to pick up speed with 2020 total deal numbers increasing 23% and proceeds rising 9% year-on-year.

 

Q1 2021 outlook: markets should sustain momentum

As COVID-19 vaccine availability keeps spirits high and companies take advantage of ample liquidity, global IPO markets should remain healthy and will likely sustain momentum going into H1 2021. From a geopolitical perspective, the agreed Brexit deal favors positive IPO market sentiments as agreements between the EU and the UK continue to take shape. While the window of opportunity remains open, IPO candidates should remain vigilant for proposed regulatory changes, a potential market correction stemming from increases in pricing volatility and the pace at which the world recovers from the COVID-19 pandemic. 

 

Commenting on the findings of the report, Stelios Demetriou, Partner and Head of Strategy and Transactions Services at EY Cyprus, stated: “Despite the impact of the pandemic, IPO markets, overall, proved resilient and adaptive. After a period of high volatility and unprecedented uncertainty, we saw a strong rebound of global IPO activity in Q4 2020, resulting in a higher volume of 2020 IPOs exceeding yearly expectations and 2019 levels. With this continued momentum, expected vaccine effectiveness, high valuations and lower volatility levels, everything is in place for a strong 2021 in global IPO activity. IPO candidates will need to demonstrate resilience and rise to the level of environmental, social and governance standards that investors are expecting.”

 

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