APAC Leads Global IPO Activity In Q3, SEA Rebounds: EY

The Asia-Pacific region dominated global initial public offering (IPO) activity in the third quarter of this year, accounting for seven of the top 10 exchanges by volume and five of the top 10 exchanges by proceeds, according to the latest quarterly report released by global consulting firm EY.

The Global IPO trends: Q3 2019 report released by EY showed that average first-day returns for IPOs on Asia Pacific’s main markets rose to 51 per cent, while average current returns swelled to 71 per cent on the back of Shanghai’s STAR Market activity.

Asia-Pacific exchanges registered 173 IPOs with $23.7 billion proceeds in Q3 2019.

While Japan’s IPO deal volume declined 57 per cent, with just 12 IPOs in Q3, and proceeds fell 74 per cent to $488 million, Southeast Asia helped push the region to lead the global scene.

Southeast Asia saw 40 IPOs with proceeds of $2.9 billion, according to the quarterly report. Exchanges in the region, which covers Singapore, Indonesia, Vietnam, Thailand, Malaysia, the Philippines, Cambodia, Myanmar, Laos, Brunei, and Timor-Leste, saw 48 per cent higher deal numbers and 555 per cent higher proceeds during the quarter.

In the same period last year, only 27 IPOs with proceeds of $440 million were registered in Southeast Asia, EY said.

Max Loh, EY Asean IPO Leader, said the rebound in activity in Southeast Asia exchanges during the quarter reflects the backlog of IPO aspirants waiting for the right to come to the market.

“Southeast Asian exchanges will continue to benefit from IPOs of entrepreneur-led companies and privatization of state-owned companies and, in the case of Singapore, REITS and business trust, given its leading position in that space,” Loh said.

Exchanges in Indonesia (IDX) and Malaysia (Bursa Malaysia, ACE Market, and LEAP Market) came up among the top 10 exchanges globally by the number of deals, registering 21 deal and 9 and deals, respectively, in Q3.

The Singapore Exchange (SGX) came up among the top 10 exchanges by proceeds with the listings of two sizeable REITs that raised $1.37 billion in the quarter.

In Greater China, Q3 IPO activity rebounded notably from Q2. STAR Market accounted for 38 per cent of Greater China IPO activity this quarter by volume and 35 per cent by proceeds.

“We anticipate IPO activity in Asia-Pacific to retain a balance between high-growth opportunities in the technology sector and the more traditional sector such as natural resources and industrial,” the report said.

From January to September, however, IPO volume in Asia Pacific was down 9 per cent, with just 436 IPOs, and proceeds decreased by 27 per cent to $46.1b compared to the same period in 2018.

EY said ongoing trade tensions between China and the US continue to impact IPO activity across parts of the region.

Globally, IPO activity was down across many markets as issuers await more favorable market conditions. Only 256 IPOs came to the market in Q3, with total proceeds of $40.2 billion, a 24-per cent decline by volume and 22-per cent by proceeds from the same period last year.

“A quiet Q3, combined with persistent geopolitical uncertainties, has led to tepid third-quarter results across global IPO markets,” said EY Global IPO Leader Paul Go.

Technology, healthcare, and industrial saw the largest share of IPOs in year to date, together accounting for 407 IPOs or 53 per cent of the global IPOs by deal volume, the EY report showed.