Global IPO trends: Q Global IPO outlook remains robust after promising Q results

Transcription

1 Global IPO trends: Global IPO outlook remains robust after promising results

2 Contents Global IPO market 3 Americas 7 Asia-Pacific 11 Europe, Middle East, India and Africa 21 Appendix 3 About this report EY Global IPO trends report is released every quarter and looks at the IPO markets, trends and outlook for the Americas, Asia- Pacific, Japan and EMEIA regions. The report provides insights, facts and figures on the 218 IPO market year-to-date and analyzes the implications for companies planning to go public in the short and medium term. You will find this report at the EY Global IPO website, where you can also subscribe for future editions. All values are US$ unless otherwise noted.

3 Global IPO market Strong start with more to come Global growth in IPO outpaced deal numbers in a relatively strong first quarter. Driven by larger transactions, global IPO activity started out with a strong increase in in what is traditionally the slowest quarter of the year, despite a decline in deal numbers. However, market volatility in February did slightly dampen investor confidence, slowing momentum gained from calendar year 217, the highest performing 12- month period since 27. Looking ahead, the outlook remains positive in many markets around the world and we expect to continue to see from a range of sources including large tech, high growth, cross-border listings, carve-outs and SOEs. Dr. Martin Steinbach EY Global and EMEIA IPO Leader Global IPO trends: Page 3

4 Global IPO market Highlights from the markets global IPO activity was at a comparably high level relative to, which was the most active first quarter since 27. The spike in volatility in February slowed IPO activity in many markets. This was caused by a rise in benchmark bond yields due to stronger growth and inflation expectations. Global deal numbers decreased by 27% while rose by 28%, with 287 raising US$42.8b, versus. Major activity was driven by the APAC, EMEIA and Americas regions in line with previous years trends. on New York (NYSE), Deutsche Börse and Shanghai stock exchanges dominated in terms of. Asia-Pacific continued to dominate global IPO activity by deal numbers in, but activity levels fell by both deal number and compared with. The region s share of global IPO activity stood at 55% by deal number. EMEIA, the second most active region by deal number, saw a decline of 17% by deal numbers in, but rose by 191% on the back of megadeals. The region ranked first by, accounting for 37% of global. A combination of Brexit uncertainty and market volatility slowed deal flow this quarter compared with. Americas share of global IPO activity improved in both by number of deals and. The region ranked second, contributing 36% of global as US in January saw the largest amount of in over 15 years. Non-financial sponsor-backed continue to trend further, now accounting for 9% of globally. Three times as many megadeals (six with of above US$1b) were recorded in compared with two such deals in. By deal numbers, industrials led with 16% of global, followed by technology (13%) and consumer products (12%). The proportion of cross-border increased further in Q1 218 by deal number compared with 217. Markets 287 globally IPO activity 2, 1,5 1, 5 Sources of Percentage of Number of 9% 81% 8% 2% 17% 27% 2% $3 $25 $2 $15 $1 $5 Proceeds US$b Percentage of $42.8b M&A activity 4, 3, 2, 1, Financial sponsor-backed Former state-owned enterprises Non-financial sponsor-backed 1% 27% Number of M&A 1% 28% $4, $3, $2, $1, Deal value US$b 72% 82% 87% 89% 9% 1% 1% 2% 17% 13% 1% 8% Figures may not total 1% due to rounding Activity Stock exchanges by highest total New York (NYSE) $1.2b 16 Deutsche Börse (Main and Scale) $8.5b 7 Shanghai (SSE) $3.3b 17 Sectors by highest number of Industrials 45 $4.7b Technology 38 $4.5b Consumer products 35 $5.2b largest by Siemens Healthineers AG $5.2b Health care Germany Deutsche Börse PagSeguro Digital Ltd. $2.3b Technology Brazil NYSE DWS Group GmbH & Co. KGaA $1.8b Financials Germany Deutsche Börse All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 4

5 Global IPO market Regional performance and trends Cross-border Percentage by number of globally Driven by stronger growth expectations and rising inflation, market volatility at the end of February saw many volatility indices spiked, slowing IPO activity. IPO candidates will need to keep a close watch in the short term to evaluate the right IPO window. Q % 7% 6% 8% 1% Regional share by number of Regional share by Top countries of origin By number of outside home country Q % 13% 12% 3% 3% 29% 55% 57% 59% Q % 27% 17% 28% 34% 37% 54% 39% 27% Mainland China (3) Singapore (3) Argentina (2) UK (2) Malaysia (2) US (2) % 25% 3% 3% 54% 45% or or = increase or decrease or remain constant for compared with the full year of 217 Figures may not total 1% due to rounding % 214 Americas EMEIA Asia-Pacific 38% 36% 31% 45% 31% Top IPO destinations* By number of NYSE (5) Hong Kong (5) London (4) NASDAQ (4) Oslo Bors (1) *IPO destinations refer to stock exchanges. All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 5

6 Global IPO market Outlook The outlook for the rest of 218 looks positive, driven by strong equity markets and sound corporate earnings. Steady investor confidence is encouraging a healthy pipeline across sectors and markets. On the downside, new geopolitical tensions and uncertainties remain visible points on the radar. Asia-Pacific: Greater China exchanges will contribute significant IPO activity in 218. The pipeline remains healthy. Robust activity is expected in Hong Kong, while Mainland China exchanges may not reach the high levels of 217, due to stricter supervision and a lower approval rate by the regulator. Japan is also set to see more. Appetite for small-cap listings is strong and we expect a steady flow of from high-tech companies. EMEIA: The European IPO outlook remains positive, with a healthy pipeline building across the region. In the UK, post- Brexit negotiations continue to drive uncertainty. India should continue its IPO boom due to the resilient nature of the economy, strong domestic liquidity and divestment of state-owned enterprises. The Middle East is expected to witness a surge in IPO activity as the macroeconomic and political environment improves and more state privatizations are likely. Americas: The US IPO pipeline will continue to be strong and resilient for the rest of 218, driven by improving macroeconomic fundamentals and technology unicorns. IPO activity in Brazil and Mexico is expected to stay strong as companies rush to list ahead of the 218 presidential elections. Canadian IPO activity is expected to accelerate based on recent trends. Cross-border deals look set to increase and remain a feature of the global IPO activity on international exchanges with different motivations in all large capital markets. EY IPO sentiment radar Our radar contains a variety of market factors that may impact investor sentiment for. Pre-IPO companies should analyze how these factors may affect their business and ultimately their impact on the timing and value of their transaction in view of their chosen IPO destination. Potential impact Consider a number of alternative funding or exit options Preserve optionality with early IPO readiness preparations Prepare early to complete your IPO quickly in narrow IPO windows Be flexible in timing and pricing Oil prices Currency Interest rate hikes Implications from changes in US trade policies Brexit Short-term volatility Geopolitical tensions Economic growth Stronger regulatory requirements All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 6

7 Americas Americas begin 218 on a high note Americas IPO activity started the year on a high, which, in large part, is due to the record-breaking start to the year by the US. Canada, Brazil and Mexico also performed well and are expected to continue to build on the robust performance the countries saw in 217. Jackie Kelley EY Americas IPO Markets Leader Global IPO trends: Page 7

8 Americas Highlights from the markets There were 44 in the Americas in the first three months of 218 raising US$15.4b, an increase of 29% in terms of number of deals and 22% by compared with. Six of the global top 1 deals in were on Americas exchanges. The second biggest deal globally was Brazilian e-commerce firm, which raised US$2.3b on the NYSE. US exchanges saw 36 in, raising US$12.8b, accounting for 82% of Americas deals and 83% by. Four of the top 2 Americas were cross-border deals on NYSE. The Mexican Stock Exchange had the fifth largest deal globally, which raised US$1.5b. Toronto Stock Exchange and Venture Exchange saw three raising US$142.2m in with IPO activity expected to accelerate in 218 based on recent trends. Technology represented 21% of Americas by in, followed by industrials with 19%. Health care led by number of deals with 23% of Americas deals, followed by energy with 16%. Markets 44 $15.4b $138.9m median deal size Activity Stock exchanges by highest total NYSE $1.2b 16 US NASDAQ $2.5b 2 US Mexican US$2.2b 2 Brazil 29% 22% 22% Sectors by highest number of Health care 1.7b Energy 7 $2.6b Technology 5 $3.2b largest by Number of Proceeds US$b PagSeguro Digital Ltd. $2.3b Technology, NYSE, Brazil ADT Inc. $1.5b Consumer products, NYSE, US Fibra E Grupo Aeroportua-rio de la Ciudad de Mexico $1.5b Industrials, Mexican, Mexico $12 $8 $4 Brazil s B3 1 IPO $269.2m $269.2m median deal size Canada s Toronto Stock Exchange and TSX Venture Exchange 3 $142.2m $1.4m median deal size IPO activity of Canadian Securities Exchange is excluded. Mexico s Mexican Stock Exchange 2 $2.2b $1.1b median deal size US s NASDAQ and NYSE 36 $12.8b $14.8m median deal size IPO activity in 216 includes one IPO on BATS exchange. 5% 43% 14% 25% 4% 9% 1% 146% 23% 44% 17% 32% Number of Number of Proceeds US$b Number of Proceeds US$b Number of Proceeds US$b Proceeds US$b $7 $6 $5 $4 $3 $2 $1 $4 $3 $2 $1 $3 $2 $1 $1 $8 $6 $4 $2 All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 8

9 Americas US IPO market insight Positive IPO performance provide strong backdrop for the year The first quarter of 218 built strong momentum for the US IPO markets. Both the volume of deals and capital raised are significantly up from recent years, in large part due to strong performance to start the year in January. Positive IPO performance to date provides a strong backdrop for continued issuance, though potential uncertainty surrounding mid-term elections could present risk in the second half of the year. Jackie Kelley EY Americas IPO Markets Leader Global IPO trends: Page 9

10 Americas US IPO market insight Highlights from the market US IPO activity increased in with 36 raising US$12.8b, up 44% by deal numbers and 17% by compared with. Five US deals were featured in the global top 1 deals, accounting for 16% of global. Cross-border accounted for 25% of on US exchanges and 32% by. Three of the top 1 US deals were crossborder, coming from Argentina, Brazil and the UK. Globally, NASDAQ ranked third by volume and sixth by in. The NYSE maintained its top position by. Health care was the most active sector by deal numbers (25%), followed by energy (17%), while technology led by with a 25% share, followed by real estate (21%). Real estate saw the highest average deal size (US$91.7b) in Q All 3 from this sector featured in the US top 1 deals. Markets 36 $12.8b 42% of are financial sponsor-backed Number of $1 $8 $6 $4 $2 Proceeds US$b IPO activity in 216 includes one IPO on BATS exchange. NASDAQ $2.5b 2 44% 17% 42% NYSE $1.2b 16 Activity Sectors by highest number of Health care 9.7b Energy 6 $1.8b Technology 4 $3.2b Consumer products 4 $1.7b Real estate 3 $2.7b Performance IPO pricing and performance US markets + or indicates change compared with offer price at IPO Equity indices DJIA +1.2% US First-day average return Share price performance since IPO (aka offer-to-current) +9.6% +18.9% S&P % US + or indicates change since 29 December 217 largest by PagSeguro Digital Ltd. $2.3b Technology, NYSE, Brazil ADT Inc. $1.5b Consumer products, NYSE, US VICI Properties Inc. $1.4b Real estate, NYSE, US Gates Industrial Corp. plc.8b Industrials, NYSE, US Americold Realty Trust.8b Real estate, NYSE, US First-day and current average returns are mean returns of issuers who started trading by 13 March. Volatility index CBOE VIX +56.1% index level YTD + indicates a increase in expected volatility as of 13 March 218 compared with 29 December 217 for year-to-date (YTD). Trends Median deal size Median post-ipo market cap New public IPO registration filings $14.8m $538.1m Median post-ipo market cap is calculated for that were priced by 14 March. Cross-border : top countries of origin 9 Outlook China 3 ($137m) Argentina 2 ($865m) Brazil 1 IPO ($2.3b) Europe 2 ($762m) Israel 1 IPO ($86m) 32% 33% Despite the volatility spike in early February, the market has stabilized and there are signs of continued investor appetite for. To date, 28 companies have filed publicly including several high-profile technology issuers that could signal a wave of unicorns through the remainder of 218. Interest in health care activity remains high. The recovery in oil prices will support more energy. Cross-border deals also contribute to the robust pipeline as a backlog of Chinese issuers target US listings. However, the 218 IPO calendar may be compressed into tighter windows as issuers look to get ahead of the midterm Congressional elections in Q All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 1

11 Asia-Pacific Pace of slows in Asia-Pacific but bounce-back expected Despite a drop in in the first quarter of the year, Asia- Pacific remained the world s busiest region for new listings. Activity was affected by the slower pace of Mainland China due to greater regulatory scrutiny and a slowdown in many markets within the region. Swimming against the regional tide, the Hong Kong Exchange saw an increase in deals that made it the busiest exchange in the world. Looking ahead, we expect a bounce-back in IPO in the next few quarters, driven by the listing of mega in Hong Kong, Japan and the ASEAN region. Ringo Choi EY Asia-Pacific IPO Leader Global IPO trends: Page 11

12 Asia-Pacific Highlights from the markets There were 157 on Asia-Pacific exchanges in, a decline of 39% compared with. The number of deals declined sharply in ; this is the lowest quarterly total since Q The region s total fell by 26% in to US$11.4b compared with, making this the lowest quarterly level since Q Asia-Pacific exchanges accounted for 6 of the top 1 exchanges globally by deal numbers in and 3 of the top 1 spots by. Hong Kong s Main Market (HKEx) and its Growth Enterprise Market (GEM) was the busiest exchange globally in, with 2% of global. Five other Asia-Pacific exchanges made the top ten list by deal numbers: Australian Securities Exchange (ranked fourth), Shenzhen Stock Exchange (fifth), Tokyo Stock Exchange (sixth), Shanghai Stock Exchange (seventh), and Korea Exchange (tenth). A large part of the decline in Asia-Pacific IPO activity is due to the slowdown of IPO activity in Mainland China. The first quarter of the year is traditionally quiet but Japan saw a 38% decline in deal numbers compared with, while Australia saw a 3% drop. Southeast Asia saw strong activity in with 18, driven by activity on exchanges in Thailand, Malaysia and Indonesia. This was an increase of 2% compared with. Companies from the industrials sector accounted for 2% of Asia-Pacific in, followed by technology (15%), consumer products (13%) and materials (13%). By, consumer products led with 23%, followed by financials (18%) and industrials (13%). Median deal size on Asia-Pacific s main markets slightly declined to US$38.2m in, down from US$47.2m in 217. There were six deals that raised more than US$5m, compared with only three in. Markets Activity 157 Main markets 88 $9.5b % 42% 2% $9 $8 $7 $6 $5 $4 $3 $2 $1 Number of $11.4b Junior markets 69 $1.9b Proceeds US$b 26% 34% 44% $14 $12 $1 $8 $6 $4 $2 Stock exchanges by highest total Shanghai (SSE) $3.3b 17 Mainland China Hong Kong (Main Market and GEM) $3.1b 57 Hong Kong Shenzhen (SZSE and ChiNext) $2.8b 18 Mainland China Sectors by highest number of Industrials 31 $1.5b Technology 23.9b Consumer products 21 $2.6b largest by Bank of Gansu Co. Ltd..9b Financials China Hong Kong (HKEx) Huaxi Securities Co., Ltd..8b Financials China Shenzhen (SZSE) Hebei Yangyuan ZhiHui Beverage Co., Ltd..7b Consumer staples China Shanghai (SSE) All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 12

13 Asia-Pacific Trends Cross-border activity 218 Asia-Pacific issuers cross-border activity Percentage of all Asia-Pacific issuers 8% 5% 6% 6% 5% After a stand-out 217, IPO activity is returning to more normal levels. Investor appetite for new listings is strong, based on solid pricing and performance, but volatility levels are rising. IPO candidates are encouraged to prepare for early and choose carefully the right time to list. Cross-border 3.1% of all Asia-Pacific issuers* listed abroad but within the Asia-Pacific region Outbound 1.9% of all Asia-Pacific issuers* listed outside Asia-Pacific Inbound 4.5% of cross-border globally** listed in Asia-Pacific but came from outside the region IPO *There were 159 by Asia-Pacific issuers in. This analysis is based on the listed company domicile, regardless of the listed company exchange. ** There were 22 cross-border globally in. Transaction sizes Sources of 97.% Main markets.2% 2.8% Percentage of Junior markets Median post- IPO market cap $161.7m 6% $38.4m Median 15% deal size $38.2m $9.7m Trends Median post-ipo market cap US$m Median deal size US$m Percentage of $3 $2 $1 1.3% 1.3% 97.4% Financial sponsor-backed $1 $8 $6 $4 $2 86% 93% 95.5% 94.9% 97.4% 1% 1%.3%.3% 1.3% 13% 6% 4.2% 4.9% 1.3% Former state-owned enterprises Non-financial sponsor-backed 62% 62%. Figures may not total 1% due to rounding. All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 13

14 Asia-Pacific Performance IPO pricing and performance Equity indices Volatility index First-day average return Share price performance since IPO Main markets +24.4% +54.3% Junior markets +32.6% +71.% Hang Seng +5.1% Hong Kong Shanghai Composite -.5% Mainland China Nikkei % Japan FTSE Straits Times +4.% Singapore ASX 2-2.1% Australia KOSPI +.8% South Korea Hang Seng Volatility 2.37 index level +39.5% YTD + or indicates change compared with offer price at IPO + or indicates change since 29 December indicates an increase in volatility as at 14 March 218 compared with 29 December 217 for year-to-date (YTD). Whereas - indicates a decrease in volatility over the same time period. Outlook Asia-Pacific equity markets bounced back in the face of global stock market turbulence in February 218, largely fighting off fears of possible trade wars and the prospect of further hikes in US interest rates. These markets would likely remain resilient in the face of any future shocks this year. A rise in the number of Asia-Pacific is expected in the coming quarters of 218, supported by strong economic growth in a number of countries, buoyant investor confidence, rising equity markets and a robust pipeline of companies ready to list. We expect another couple of active quarters for IPO activity on the HKEx and GEM. The Hang Seng Index is back at record levels, investor appetite for is solid and reforms to HKEx s listing requirements (which are designed to attract more tech start-ups and family-owned businesses) are expected to become effective as early as June 218. In contrast, IPO activity on Mainland China exchanges is unlikely to reach 217 levels due to stricter supervision and a lower listing approval rate by the local regulator. However, the China Securities Regulatory Commission has indicated that it will provide more policy support to the listing of high-quality companies and industry giants. This may lead to companies that are currently listed overseas to consider returning to the A-share market. 218 will see a continuing battle for Southeast Asian listings between Hong Kong, Singapore and local ASEAN exchanges. Activity in small-cap listings on the ASX is expected to stay strong, particularly for mining and metals and technology companies, as new players enter the sector and overseas interest develops. IPO activity on Japanese exchanges is expected to increase in the coming months, putting the country on course to reach approximately 1 this year. Some companies preparing to go public may likely accelerate their plans to list in an effort to get ahead of the expected mega-ipo of SoftBank s Japanese telecoms business, which is forecast to list around Q3 218 and could raise up to US$18b. Asia-Pacific will continue to be the world s most active region in terms of deal numbers in the coming quarters. However, given the shift toward smaller deal sizes and with more mega- expected in other markets around the world, it is less certain that Asia-Pacific will hold onto the top spot in terms of capital raised for every quarter. All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 14

15 Asia-Pacific Greater China market insight Greater China exchanges: a tale of two markets The story for Greater China stock markets in was a tale of two opposite trends, with strong IPO issuance in Hong Kong while activity levels on the Mainland fell dramatically because of stricter supervision and lower approval rates. Looking forward, we expect robust IPO activity in Greater China with both markets taking steps to attract high-quality listings, especially of companies in the technology and biotech sectors. Terence Ho EY Greater China IPO Leader Global IPO trends: Page 15

16 Asia-Pacific Greater China market insight Highlights from the markets Hong Kong s Main Market (HKEx) and Growth Enterprise Market (GEM) as a whole was the busiest exchange in the world in by number of deals (57 ) and ranked fourth by (US$3.1b). It accounted for 2% of worldwide and 7% of. Shenzhen Stock Exchange (SZSE), the busiest in the world in 217, moved to fifth place in by number of, while Shanghai (SSE) was seventh. By, SZSE ranked fifth, behind Shanghai (SSE) in third place. saw the highest quarterly number of deals on the HKEx and GEM since Q4 213 and the highest first quarter on record. HKEx benefited from the resilience of its stock market, the solid share price performance of companies post-ipo and its ability to process listings relatively quickly. IPO candidates found it much harder to gain regulatory approval in Mainland China in. This resulted in just 35, down 74% on the total of 134, which was the highest quarterly number of ever. At US$6.1b, were down 39% on. The decline in Mainland Chinese listings was not matched by the increase in Hong Kong. As a result, the number of and on Greater China exchanges (93, US$9.3b) fell to its lowest level since Q Despite the decline in Mainland exchanges IPO activity, they accounted for 3 of the global Top 2 and median deal size and median post-ipo market cap both rose significantly in compared with 217. Industrials remained the most active sector in Greater China by deal number, contributing 27% of deals. While consumer products led by in, accounting for 25% of the region s. Markets 93 Hong Kong Main Market 26 $2.8b % 24% 35 8% $6.1b $35 $3 $25 $2 $15 $1 $5 Number of $9.3b Shanghai and Shenzhen Proceeds US$b 22% 74% 39% Shenzhen includes both listings on the Mainboard, Small and Medium Enterprise board and ChiNext $4 $35 $3 $25 $2 $15 $1 $5 Activity Hong Kong Main Market Sectors by highest number of Technology 7 $24m Industrials 6 $245m Real estate 3 $1.1b Shanghai and Shenzhen Sectors by highest number of Industrials 1 $1.1b Consumer products 5 $981m Technology 5 $59m largest by Bank of Gansu Co., Ltd. $883m Financials Zhenro Properties Group Ltd. $578m Real estate A-Living Services Co., Ltd. $524m Real estate largest by Huaxi Securities Co., Ltd. $776m Financials, Shenzhen Hebei Yangyuan ZhiHui Beverage Co., Ltd. $669m Consumer staples, Shanghai Jiangsu Financial Leasing Co., Ltd. $636m Consumer products, Shanghai All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 16

17 Asia-Pacific Greater China market insight Trends Cross-border activity Greater China issuers cross-border activity Percentage of all China issuers 1% 4% 6% 5% Despite a drop-off in Greater China IPO activity in, investor appetite remains strong. Every IPO in Hong Kong so far this year has been oversubscribed while every new Mainland listing has reached the maximum permitted first-day return of 44%. 3% To which destination? 3 to US exchanges Leaving Greater China Outbound 3.3% of Greater China issuers* listed abroad Coming to Greater China Inbound 22.7% of cross-border globally** were listed on HKEx and GEM 3 5 *There were 91 by Greater China issuers in. This analysis is based on the listed company domicile, regardless of the listed company exchange. ** There were 22 cross-border globally in. Transaction sizes Sources of 1% 1% Hong Kong Main Market Percentage of Shanghai and Shenzhen Median post- 3% IPO market cap $116.7m $441.2m Median deal size $28.9m $82.m Trends Median post-ipo market cap US$m Median deal size US$m Percentage of $5 $4 $3 $2 $1 Financial sponsor-backed Former state-owned enterprises Non-financial sponsor-backed 116% 2% 68% $5 $4 $3 $2 $1 9% 94% 99.14% 99% 1.% 1% 1%.29% 9% 5%.58% 1%. Figures may not total 1% due to rounding. All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 17

18 Asia-Pacific Greater China market insight Performance IPO pipeline IPO pricing and performance Hong Kong Main Market Shanghai and Shenzhen First-day average return Share price performance since IPO +2.1% +17.1% +44.% +71.1% Equity indices Mainland China Shanghai Composite -.5% Equity indices Hong Kong Hang Seng +5.1% Hang Seng China Enterprises +8.3% Shenzhen Composite -1.1% Hang Seng China Affiliated Corporations +1.7% Shenzhen SME +1.% Volatility index Hang Seng Volatility 2.37 index level YTD More than 47 companies are in the China Securities Regulatory Commission (CSRC) pipeline. More than 15 companies have submitted public filings with HKEx. + or indicates change compared with offer price at IPO + or indicates change since 29 December indicates a decrease in volatility as at 14 March 218 compared with 29 December 217 for year-to-date (YTD). Outlook The economic backdrop looks favorable for Hong Kong listings, with strong corporate earnings growth expected to support the stock market. The Hong Kong IPO market will continue to be busy, with more than 15 companies waiting to go public as at 2 March. A flurry of on the HKEx is expected when reforms to its listing regime are implemented possibly as early as June. Through these reforms, the exchange aims to encourage IPO listings by technology and biotechnology companies, start-ups, as well as companies that want to preserve control within the founding family through a platform for companies with dual-class shares, where one group of shareholders has superior voting rights over the other. HKEx s efforts to encourage companies already listed overseas to seek a second listing in Hong Kong are likely to bear fruit in the coming months. HKEx will continue to see an increasing number of cross-border from ASEAN companies. In, five cross-border on HKEx raised a combined US$115m. Three of these were from Singapore, with one each from Malaysia and the US. Reflecting the embrace of technology companies, three of these cross-border issuers were from the technology, media and telecoms sectors. In Mainland China, the number of flotations will remain subdued compared with 217 levels because of the regulator s stricter and more painstaking approach to approvals. In (as at 2 March), the Issuance Examination Committee of China Securities Regulatory Commission processed only 63 IPO applications, with 29 applications being rejected. The rejection rate of increased to 46% in, compared with 36% in Q HKEx may eventually face renewed competition from Mainland China exchanges, since the Mainland authorities are keen to attract a greater number of high-tech enterprises to list on the domestic stock market. Factors that could have a negative impact on the IPO market in Greater China include the possibility of trade barriers being introduced by the US and the expectation of further US interest rate rises, which would increase pressure on the outflow of capital. All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 18

19 Asia-Pacific Japan market insight Small-cap listings drive activity in Japan Despite an increase in market volatility during, Japanese investor sentiment continues to hold up. Appetite for small-cap listings is strong and we expect a steady flow of in the coming quarters, especially of high-tech companies a sector encouraged by the Abenomics policies. If Japan continues its longest uninterrupted growth stint in almost three decades, we expect the total number of for 218 could reach 1. Moreover, we expect that an increasing number of small or midcap companies listed on the MOTHERS and JASDAQ boards will grow and later transfer onto the Main Market. Shinichiro Suzuki EY Japan IPO Leader Global IPO trends: Page 19

20 Asia-Pacific Japan market insight Highlights from the market The Japan Exchange Group, which includes the Tokyo Stock Exchange, the two junior markets the MOTHERS board for growth companies and JASDAQ, was ranked as the sixth most active exchange by deal numbers globally in, with 18 6% of the global total. However, the number of in Japan was down by 38% in on the same quarter last year and is the lowest for the first quarter since Q Average IPO size was small in, with a dearth of largecap deals. Total came to US$1.b, the lowest quarter since Q2 217 and the lowest first quarter since Q The tendency for smaller companiesz to come to the IPO market continues. saw 6 on the Tokyo Main Market, compared with 12 on the junior markets and 18 companies that transferred from the junior markets to be listed on the Main Market. We are seeing an increasing number of small or mid-sized companies grow while listed on the junior markets and transfer onto the Main Market as part of their growth strategy. Lately, an increasing number of start-ups regard an IPO as the means to grow their business rather than just an event to raise funds and become a public company. The range of companies that went public in came from a diverse range of sectors with consumer products, real estate and technology being the three most active sectors by deal numbers. There were a number of from high-tech companies and specialist technology-related manufacturers. The high-tech flavor of listings reflects the strong support given to this sector by the Japanese Government, which is encouraging investment in artificial intelligence, fintech and other future-leading fields, as part of the Abenomics program to boost long-term economic growth. We expect an increase in IPO activity in Japan in the coming months. We expect approximately 1 for the full year of 218, slightly higher than the 95 seen in 217. Markets 18 Tokyo Main Market 6.8b $162.8m median deal size % JASDAQ and MOTHERS $197.7m 48% 45% $1.6m 164% median deal size 1% $16 $12 $8 $4 Number of % $1.b 48% 43% $1.2 $ Proceeds US$b Activity Sectors by highest number of Consumer products 5 $316m Real estate 3 $411m Technology 3 $47m largest by CRE Logistics REIT $25m Real estate Main Market XYMAX REIT Investment Corp. $21m Real estate Main Market QB Net Holdings Co., Ltd. $196m Consumer products Main Market Tokyo Main Market IPO pricing and performance First-day average return +1.3% Share price performance since IPO +3.2% + or indicates change compared with offer price at IPO Equity index Nikkei % Japan. + or indicates change since 29 December 217 All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 2

21 Europe, Middle East, India and Africa Megadeals acting as icebreakers as we move into second quarter EMEIA enjoyed a strong first quarter with a slew of European megadeals toward the second half of March pushing capital raised to the highest level for the first quarter since Q We expect these deals will act as ice-breakers, preparing the way for a buoyant second quarter. With Indian markets performing well and the pipeline in the Middle East delivering a steady deal flow, prospects for the first half in EMEIA are positive. Dr. Martin Steinbach EY Global and EMEIA IPO Leader Global IPO trends: Page 21

22 Europe, Middle East, India and Africa Highlights from the markets EMEIA saw 86, which raised US$16.b in, making the region first by and second in terms of deal numbers. EMEIA markets saw a strong start to 218. While the first quarter is traditionally the quietest, IPO deal numbers in Q1 218 declined by 17% compared with, while rose by a substantial 191% on the back of megadeals. The area saw three of the global top ten and five of the top 2 in. There were two megadeals (43% of EMEIA ) and six deals with above US$5m. EMEIA exchanges accounted for four of the top ten exchanges globally by in and two by deal numbers. Deutsche Börse ranked second among global exchanges by capital raised, accounting for 2% of global. Oslo Bors, Euronext and London Stock Exchange came in eighth, ninth and tenth places respectively, accounting for 2.8%, 2.7% and 2.7% of global respectively. UK exchanges saw eight raising US$1.2b in, a decline of 38% by and 6% by over. On the back of a bumper 217, India s Bombay and National stock exchanges and their junior markets were ranked second and ninth by deal numbers among global top ten exchanges. Bombay s Main and SME markets saw 23, which raised US$739.7m in, while National s Main and SME markets had 16, which together raised US$45m. The Middle East saw six in, which raised a combined US$514m. Health care was the most active sector by in Q1 218, accounting for 39% of EMEIA. This was followed by financials (18%) and real estate (1%). The proportion of financial sponsor-backed fell further both in terms of deal numbers and in. Markets 86 Main markets 39 $15.3b % Junior markets 47 3% 27% 221%.7b.4% $8 $6 $4 $2 Number of $16.b Proceeds US$b 191% $7. $6. $5. $4. $3. $2. $1.. Activity Stock exchanges By highest Deutsche Börse (Main and Scale) $8.5b 7 Germany Oslo Bors $1.2b 3 Norway Euronext and Alternext $1.2b 4 Belgium and Netherlands Sectors by highest number of Consumer staples 15 $1.1b Health care 12 $6.3b Consumer products 1.8b largest by Siemens Healthineers AG $5.2b Germany Health care Deutsche Börse DWS Group GmbH & Co. KGaA $1.8b Financials Germany Deutsche Börse Elkem ASA $1.b Materials Norway Oslo Bors All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 22

23 Europe, Middle East, India and Africa Trends Cross-border activity EMEIA issuers cross-border activity Percentage of all EMEIA issuers 16% 12% 8% 8% 9% While exchanges across Europe continue to see a healthy flow of new listings, India and the Middle East exchanges are reaching the point in their evolution where they will see an acceleration in the number of private and state-owned companies looking to raise capital from the public markets. Cross-border 9.2% of all EMEIA issuers* listed abroad Outbound 3.4% of all EMEIA issuers* listed outside EMEIA Inbound 9.1% of cross-border globally** listed on EMEIA exchanges but came from outside the region *There were 87 by EMEIA issuers in. This analysis is based on the listed company domicile, regardless of the listed company exchange. ** There were 22 cross-border globally in Transaction sizes Sources of Main markets Junior markets Median post- IPO market cap $39.6m 141% $11.m Median deal size $147.5m 15% $3.1m Trends Median post-ipo market cap US$m Median deal size US$m Percentage of 9% 91% $5 $4 $3 $2 $1 6% 7% 3% Percentage of 3% 78% 8% 83% 89% 9% 1% 1% 2% 2% 3% 21% 19% 15% 1% 7% Financial sponsor-backed Former state-owned enterprises Non-financial sponsor-backed $4 $3 $2 $1 5% 9%. Figures may not total 1% due to rounding. All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 23

24 Europe, Middle East, India and Africa Performance IPO pricing and performance Equity indices Volatility indices First-day average return Share price performance since IPO Main markets +3.2% +.9% Junior markets +1.4% +2.2% + or indicates change compared with offer price at IPO BSE SENSEX -.6% India FTSE 1-7.2% UK CAC 4-1.5% France + or indicates change since 29 December 217 JSE All Share -1.8% South Africa DAX 3-5.3% Germany MICEX +7.8% Russian Federation Euro STOXX 5-1.9% Europe Tadawul All Share -6.1% Saudi Arabia VSTOXX index level +25.2% YTD VDAX 18.4 index level +3.% YTD VFTSE index level +46.3% YTD - + indicates a increase in volatility as at 13 March 218 compared with 29 December 217 for year-to-date (YTD). Whereas - indicates an decrease in volatility over the same time period. Outlook The outlook for the rest of 218 looks positive for EMEIA as economic growth remains robust; and consumption and investments gain healthy momentum across the region. The increase in IPO activity and growth in the IPO pipeline is being driven by most countries and sectors; with businesses continuing to profit from the low interest rates and positive global environment. The Europe IPO outlook remains positive on the back of robust growth in the German and French economies. With two megadeals in, IPO activity on Deutsche Börse for 218 is expected to have one of the strongest years. We expect a number of megadeals to come to the European public markets later this year, including on the German, Swiss and Nordics capital markets. These include of carve-outs from conglomerates and by family businesses. These deals could be ice-breakers that encourage other private companies to join the IPO pipeline. The IPO outlook for the UK in 218 remains neutral as the UK's post-brexit relationship with the EU remains uncertain. Despite a slight uptick in the GDP forecast and manufacturing growth, the underlying pace remains slow. However, the IPO pipeline seems strong with cross-border from big African corporations. The Indian IPO market is expected to remain robust in 218 due to the resilient nature of the economy and strong domestic liquidity. The IPO pipeline is healthy with dozens of companies looking to go public later this year. The divestment of state-owned enterprises by the Government is also likely to propel IPO activity in the country. More than 1 small and medium enterprises (SMEs) are expected to list on the SME platform this year. With an improving macroeconomic and political environment, the Middle East should witness a surge in IPO activity. There is a strong pipeline of with government-owned assets being prepared for IPO in Kuwait, Egypt, KSA and the UAE. In addition, family-owned, owner-managed and private equity-backed businesses are also signalling their intention to come to the public markets during 218. Due to political and economic instability in many key markets in Africa, IPO activity is likely to remain subdued for the rest of 218. All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 24

25 Europe snapshot Markets Activity 39 15% of are financial sponsorbacked Main markets 24 $14.1b % 5% 33% 281% $7 $6 $5 $4 $3 $2 $1 Number of $14.7b 6% of are financial sponsorbacked Junior markets 15.7b % Proceeds US$b 85% 4% Sectors by highest number of Health care 8 $6.1b Technology 8.5b Consumer products 5.7b largest by Siemens Healthineers AG $5.2b Health care, Deutsche Börse DWS Group GmbH & Co. KGaA $1.8b Financials, Deutsche Börse Elkem ASA Performance 2% $1.b Materials, Oslo Bors Equity indices Volatility index IPO pricing and performance $6 Stock exchanges by highest total First-day average return $5 $4 $3 $2 $1 Deutsche Börse (Main and Scale) $8.5b 7 Germany Oslo Bors US$1.2b 3 Norway Euronext and Alternext US$1.2b 4 Belgium, Netherlands Trends Transaction sizes CAC 4-1.5% France Euro STOXX 5-1.9% Europe DAX 3-5.3% Germany FTSE 1-7.2% UK + or indicates change since 29 December 217 Main markets Junior markets Median post-ipo market cap $429.7m 114% $31.4m Median deal size $328.2m 155% $7.m Cross-border : top IPO issuers Cross-border 18% of all Europe issuers* listed abroad 7 Outbound 5.1% of all Europe issuers* listed outside Europe *There were 39 by European issuers in. This analysis is based on the listed company domicile, regardless of the listed company exchange. ** There were 22 cross-border globally in. 2 VSTOXX +25.2% 16.9 index level YTD VFTSE % 14. index level YTD + indicates a increase in volatility as at 14 March 218 compared with 29 December 217 for year-to-date (YTD). Inbound 9.1% of cross-border globally** listed on European exchanges but came from outside Europe 4% 3% Main markets +1.7% Junior markets +2.% Share price performance since IPO Main markets +1.2% Junior markets +3.4% 2 + or indicates change compared with offer price at IPO All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 25

26 EMEIA UK IPO market insight Economic and political uncertainty subdue UK The first quarter of 218 has seen low volumes of listings due to a combination of global volatility, currency movement and Brexit uncertainty all factors that are likely to continue to subdue investor sentiment and in turn, IPO activity in the coming quarters. Financial services should remain active, given the strength of investor interest, but a lack of exciting brand names or strong PE-backed listings in the pipeline continue to act as a brake on activity. Scott McCubbin EY UK and Ireland IPO Leader Global IPO trends: Page 26

27 EMEIA UK IPO market insight Highlights from the markets London Stock Exchange (LSE) saw a quiet start to 218, with eight raising US$1.2b in aggregate. LSE was ranked 1 th among the top 1 global exchanges by, accounting for 2.7% of global. LSE accounted for 2.8% of global ; down from 3.3% in. London Main Market saw three, which raised a combined US$1.1b, while the Alternative Investment Market (AIM) had five, which raised US$66m in total. London s Main Market and AIM combined saw a decline of 38% by deal numbers, while rose marginally by 6%. Newly listed stock in the Main Market delivered returns of 31% on average above list price as at mid-march, although two of the five stocks listed below their expected price. The financial services sector has dominated, accounting for two of the eight and 51% of UK IPO. This focus confirms that London continues to hold its position as a global financial centre despite political turbulence. The FTSE reached record levels during January 218, largely because the low value of the pound made UK investments of particular interest to international investors. However, global market volatility affected the UK, along with all the other major global exchanges in February. The UK equity market has since rebounded strongly, but remains some way off its record levels. In common with other parts of the world, the volatility in global share indices in February has delayed some of this quarter s potential listings until markets have fully stabilized. Only one of the eight in was PE-backed. The lull in PE-backed has also held back the total raised on UK exchanges. Markets 8 London Main Market 3 $1.1b % 63% 13% $25 $2 $15 $1 $5 $1.2b London AIM 5 $66m % % 47% $8 $6 $4 $2 Activity Sectors by highest number of Financials 2 $587m Technology 2 $51m Energy 1 IPO $5m on Main Market largest by Energean Oil & Gas SA $5m Energy Greece JTC plc $338m Financials Jersey IntegraFin Holdings Ltd $249m Financials UK on AIM largest by OnTheMarket plc $43m Technology UK VR Education Holdings plc $8m Technology Ireland Dual listing on Irish Stock Exchange Cradle Arc plc $8m Materials UK Number of Proceeds US$b All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 27

28 EMEIA UK IPO market insight Trends Cross-border activity Main market Top countries of origin Greece (1 IPO $5m) Jersey (1 IPO $338m) AIM Top countries of origin Ireland (1 IPO $8m) US (1 IPO $-*) *This IPO would be priced on 26 March, when information becomes available. Leaving UK Outbound 33% of UK issuers* listed abroad Coming to UK Inbound 18% of cross-border globally** were listed on UK exchanges 2 4 *There were 6 by UK issuers in. This analysis is based on the listed company domicile, regardless of the listed company exchange. ** There were 22 cross-border globally in. Transaction sizes Sources of London Main Market Percentage of London AIM Median post- 277% IPO market cap $669.3m $41.8m Median 134% deal size $338.m $8.1m Trends Median post-ipo market cap US$m Median deal size US$m $1, $8 $6 $4 $2 $12 $1 $8 $6 $4 $2 65% 59% 7% 65% 76% 87% 88% from the financials sector led the field for UK listings during a quiet quarter. Although the market may remain low-key overall, we expect to see some of the previously postponed listings to be reactivated in Q2 218, especially those with smaller deal size. We also expect an influx of cross-border from many parts of the world. Percentage of 12% 29% % % % % 88% % 71% 3% 35% 1% % 24% 12% 12% Financial sponsor-backed Former state-owned enterprises Non-financial sponsor-backed. Figures may not total 1% due to rounding. All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 28

29 EMEIA UK IPO market insight Performance IPO pricing and performance Equity indices Volatility indices First-day average return Share price performance since IPO London Main Market +23.9% +3.8% FTSE 1-7.2% UK FTSE % UK FTSE AIM All-Share +.4% UK FTSE 1 VIX (VFTSE 1) index level +46.3% YTD London AIM +1.1% +1.5% + or indicates change compared with offer price at IPO + or indicates change since 29 December indicates a increase in volatility as at 14 March 218 compared with 29 December 2167for year-to-date (YTD). Outlook Investors and IPO candidates are concerned about the possibility of continued volatility on global markets and the potential impact on markets of policy shifts in the US. This combined with Brexit uncertainty may hold back IPO activity in Q2 218 and for the rest of 218. The UK IPO pipeline is currently still looking strong for small Main Market listings and AIM listings. We expect to see IPO activity to peak in Q3 218 for this group of companies, particularly as some of the delayed listings from come on stream. There are some signs of more listings from larger companies anticipating more significant deal sizes, but this part of the market is very much waiting for a first-mover to lead the way. The low valuation of the pound, along with the continued uncertainty around the UK s exit from the EU will hold back appetite for listing toward the end of the year. As a result, we expect to see a quiet conclusion to 218 as Brexit approaches. Overall, investor confidence remains low, particularly as other opportunities for investment currently stand out above the IPO market in terms of returns. This explains the low level of financial sponsor-backed IPO activity in recent months. IPO pricing remains under pressure in 218 due to the continuing low level of attractive private equity-backed or VC-backed listings. This lull may persist until we see some strong brand names or financial sponsor-backed companies with genuinely compelling equity stories come to the public markets, acting as ice-breakers. Financial Conduct Authority (FCA) changes to the rules around UK will come into effect in July 218, clarifying and enhancing the listing process, particularly for foreign companies seeking to list in the UK. As a result of these rule changes, we expect uplift in UK IPO activity level in the second half of 218 and beyond. The most significant FCA change relates to the timing of the IPO documentation, which would be become effective from 1 July 218. All values are US$ unless otherwise noted. and Q1 18 refer to the first quarter of 218 and cover priced from 1 January to 14 March 218 plus expected by the end of March. Global IPO trends: Page 29

30 Appendix Areas and regional IPO markets facts and figures Definitions