Uncertainty puts IPOs on hold in 2016, but pipeline is strong for 2017

Uncertainty puts IPOs on hold in 2016, but pipeline is strong for 2017

EY IPO report: "Uncertainty puts IPOs on hold in 2016, but pipeline is strong for 2017"
  • Third-quarter global IPO volumes slightly down over 2Q, but up year-over-year
  • Cross-border listings at historic low level of 6%
  • Asia-Pacific to lead activity in Q4 while focus on US and EMEIA to increase in 2017

Unprecedented levels of geopolitical uncertainty are weighing heavily on dealmakers, despite improving economic fundamentals, suggesting 2016 will be a slow year for IPOs globally, according to the quarterly EY Global IPO Trends: 2016 3Q.

At US$79.4b, January-September global IPO proceeds were 39% lower than in the same period in 2015 and deal volumes (704) were down by 23%. Quarter-over-quarter, global proceeds showed improvement, growing 16% compared to 2Q16 to US$35.4b, while deal volumes declined by 4% to 252. Third-quarter performance was strong compared with 3Q15. Proceeds increased 84% compared to 3Q15 while the number of deals rose by 21%.

Asia-Pacific claims number one spot

Asia-Pacific was the stand-out performer in 3Q16, with a 138% surge in proceeds to US$24.2b and a 41% increase in deal volume (176) compared to the previous quarter. In 3Q16, the Asia-Pacific region accounted for 69% of IPOs worldwide and a 53% share of proceeds, having turned in steady gains on both measures quarter by quarter. Although China continues to dominate, there was significant activity in Japan, Australia and South Korea. Japan, in particular, continues to see healthy IPO activity with 19 deals raising US$1.5b in 3Q16, compared to US$1.1b in proceeds through 18 IPOs in 2Q16.

Ringo Choi, EY Asia-Pacific IPO Leader, says:

“Investor sentiment in Asia-Pacific has been buoyed by ample liquidity in emerging markets and the upcoming launch of the Shenzhen-Hong Kong Stock Connect program. With investor confidence seemingly undented by events elsewhere in the world, we expect a healthy flow of IPOs to continue in the region through the remainder of the year.”

EMEIA IPO activity rebounding as conditions are improving

EMEIA IPO proceeds slumped by 69% to US$4.4b in 3Q16 from US$14.0b the previous quarter. Deal volumes were down by 60%, dropping from 97 deals in 2Q16 to 40 in 3Q16. The decline was most marked in Europe where proceeds and deal volume both fell by 72% between the second and third quarters while deal numbers fell by 38% and proceeds declined by 19% compared to 3Q15. India had a 20% increase in deal numbers and is anticipating robust activity on the back of stronger economic fundamentals and a pro-business political regime.

Dr Martin Steinbach, EY EMEIA IPO leader, says:

“Political uncertainty concerning Brexit and the US elections, rather than the events themselves, is causing private companies to delay their decisions on when to list. In addition, IPOs are executed locally, but investors are approached globally, so uncertainty spreads beyond the region where the IPO originates. However, as the political situation becomes clearer, the mix of a steady economic backdrop, accommodative monetary policy, low interest rate environments, still high equity valuations and current low volatility levels are expected to lead to a rebound in IPO activity for the remainder of the year and through 2017.”

Quiet IPO year continues in US

US IPO activity remained quiet in the third quarter, with 35 deals raising just US$6.4b ¾ largely mirroring last year’s traditionally weak third quarter when 33 US IPOs raised US$5.7b. From January to September, 79 US IPOs raised US$13.4b, representing a 44% drop in the number of deals compared to the same period in 2015 and a 49% decline in capital raised.

Jackie Kelley, EY Americas IPO Leader, says:

“Despite the very strong performance of this year’s debutants ¾ which are currently trading on average at 31.7% above offering price ¾ most private companies and financial investors are adopting a wait-and-see strategy. With levels of private capital still at all-time highs and multitracking baked into corporate strategy, business leaders and financial sponsors are focused on getting set for 2017 when political and interest rate uncertainty are likely resolved by year-end and conditions will be supportive of doing a well-priced IPO.”

Fourth quarter will remain stop-start but market will take off in 2017

Over the last five years, emerging markets have underperformed and, in a number of instances, look relatively undervalued. IPO activity in emerging markets continues to gather pace as alternative financing options are more limited and the appeal of public markets is strong. With their return to form, we anticipate that Asia-Pacific is expected to continue to represent the epicenter of IPO activity in 4Q16. China is set to see a higher level of IPO activity as the regulator looks to clear the pipeline by approving bigger deals now that equity markets have stabilized. Likewise, India is anticipating robust activity on the back of stronger economic fundamentals and a pro-business political regime.

In developed markets, some companies have hit the pause button and are refocusing their energies on preparing for 2017. Although global IPO activity in 2016 will likely lag behind 2015 levels, the outlook for 2017 is positive due to improving economic fundamentals, high valuations and lower volatility which will support IPO sentiment.

While a return to the record levels of activity in 2014 may be a stretch, the IPO activity for 2017 is expected to surpass 2015.

About the data

Analysis included on this press release includes all deals listed up to 16 September and EY’s expectation of deals that will close in the rest of September. Data sourced from Dealogic as of 17 September 2016. January 2016 through September 2016 (i.e., 3Q16 YTD) IPO activity is based on priced IPOs as of 17 September and expected IPOs by the end of September. M&A data is sourced from Dealogic as of 17 September 2016.

Appendix: January 2016-September 2016 global IPOs by sector


Number of deals

% of global deal number

Proceeds (US$)

% of global capital raised

Consumer products and services





Consumer staples















Health care




















Media and entertainment





Real estate















Global total





Capital raised on Japanese exchanges of US$1.5b excluded the US$1.3b dual-listing of Line Corp. on NYSE and Tokyo Stock Exchange because the majority of IPO proceeds were raised on NYSE.

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