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Getting The Deal Through

Global overview

Joshua Ford Bonnie and Kevin P Kennedy

Simpson Thacher & Bartlett LLP

Thursday 15 August 2019

According to a study by Ernst & Young LLP, the global IPO market in 2018 remained steady despite macroeconomic uncertainty. While 2018 saw a year-over-year decline of 21 per cent in the number of transactions to 1,359 IPOs, the aggregate amount of IPO proceeds raised globally increased by 6 per cent from 2017 to US$204.8 billion in 2018. Although usually a slower quarter, the first quarter of 2019 was particularly quiet owing in part to ongoing geopolitical and trade uncertainty. The government shutdown in the United States in January 2019 seemed to exacerbate the muted beginning to the year in that country. Even though IPO activity increased in the second quarter, year-to-date numbers were down compared to the same period in 2018. However, there are signs that the second half of 2019 could see a rebound.

In the United States, 2018 was a good year, with 205 companies conducting IPOs on US exchanges raising an aggregate of US$52.8 billion in proceeds, an increase of 14 per cent and 31 per cent, respectively, compared with 2017, according to Ernst & Young LLP. The number of non-US companies conducting IPOs on US exchanges continued to increase – 60 cross-border IPOs in 2018 compared with 41 in 2017. IPOs in the United States represented 26 per cent of global IPO activity in 2018, as measured by gross IPO proceeds raised, up from 21 per cent in 2017. In addition, US exchanges continue to be a popular destination for IPOs with 15 per cent of global IPO transactions listed on US exchanges in 2018. While the first quarter of 2019 was even slower than usual, the US IPO market had a stellar second quarter, with 66 IPOs raising a total of US$27 billion in IPO proceeds, the best second quarter in five years.

According to Ernst & Young LLP, Asia-Pacific once again led the global IPO market with 666 IPOs, or 49 per cent of the total number of IPOs globally, conducted during 2018 and resulting in US$97.1 billion, or 48 per cent of global IPO proceeds. Asian-Pacific exchanges took six of the top 10 spots globally by the number of deals and five by proceeds. The Hong Kong Stock Exchange was the busiest exchange in 2018 by both the number of deals and proceeds, with 197 IPOs raising US$35.4 billion in aggregate proceeds. The exchanges in mainland China experienced a slowdown in 2018 owing to various factors including concerns about global trade. The Japanese exchanges hosted 97 IPOs, up 2 per cent from the previous year, raising US$26.4 billion, up an impressive 333 per cent from 2017. While the Australian IPO market in 2018 saw a decrease in deal volume to 85 IPOs compared to 101 in 2017, by proceeds it increased by 129 per cent.

Owing to various negative macroeconomic factors, IPO activity in Europe, the Middle East, India and Africa slowed compared with the prior year, although this region was the world’s second-largest IPO market in 2018. According to Ernst & Young LLP, this area saw 432 IPOs that raised US$47.7 billion in proceeds during 2018, a decrease from the previous year of 16 per cent and 26 per cent, respectively. Notwithstanding continued uncertainty regarding Brexit, the London Stock Exchange was the seventh top exchange by proceeds in 2018 with 51 IPOs raising US$8.5 billion in proceeds, a year-over-year decrease of 35 per cent and 43 per cent, respectively. India’s exchanges saw 161 IPOs raising US$5.5 billion. The Middle East and North Africa raised US$2.9 billion in total proceeds from 28 IPOs, a decrease of 36 per cent and 45 per cent, respectively.

In Latin America, Mexico experienced a decent IPO market in 2018 with six IPOs raising US$3.2 billion in aggregate proceeds, an increase of 20 per cent and 24 per cent, respectively, according to Ernst & Young LLP. Brazil, on the other hand, saw a decline in IPO activity with three IPOs that raised a total of US$2 billion in proceeds, a decrease of 70 per cent and 65 per cent, respectively.

The editors are pleased to be associated with some of the finest legal counsel in each of the countries covered in this volume and hope that you find the chapters relevant and useful.

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