Initial Public Offerings Create More Global Wealth

Tom Burroughes

28 March 2018

Initial public offerings, which are important in creating new high net worth individuals, created more new wealth in the first quarter of this year than a year ago, according to global figures issued yesterday.

Proceeds from IPOs in Europe and the US grew in Q1 from a year earlier although Asia saw a decline, region, results were buoyed by European “mega deals” and strong performances in India, EY said.

These markets raised $16.0 billion in Q1 2018 with 86 deals, placing the region second to Asia-Pacific in terms of deal numbers. Proceeds rose by 191 per cent on the back of mega deals. The area saw two of the top three IPOs and five of the top 20 IPOs in Q1 2018. Emerging markets contributed strongly to overall IPO performance, with India's Bombay and National exchanges recording a 14 per cent increase in proceeds raised compared to Q1 2017 and a slight increase (5 per cent) in terms of deal numbers (39 IPOs). The Middle East saw a 17 per cent increase in IPO proceeds with former state-owned enterprises and family-owned and PE-backed businesses expected to drive IPO activity in the coming months.

Asia-Pacific
Asia-Pacific markets saw a decline in deal activity in Q1 2018 with 157 IPOs – a 39 per cent drop when compared with Q1 2017, and the lowest quarterly total since Q2 2016. Total proceeds this quarter stood at $11.4 billion, down 26 per cent compared to Q1 2017 and the lowest level since Q1 2016. However, despite the drop in IPO activity, Asia-Pacific remained the world's busiest region for new listings in Q1 2018.

"IPO activity in Asia-Pacific this quarter was defined by the slower pace of Mainland China IPOs 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 proceeds in the next few quarters, driven by the listing of mega IPOs in Hong Kong, Japan and the ASEAN region," Ringo Choi, EY Asia-Pacific IPO leader, said.