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Virus Stalls Global IPO Activity

March 31st, 2020

IPO activity that was on track to regain the momentum of the first quarter of 2018, may now end 2020's Q1 just slightly better than last year.

EY IPOs Q1 2020.jpg

EY's quarterly Global Trends Report says the quarter ending today will show no more than 235 IPO deals. Better than 2019's 211, but far short of the 323 reported in 2018. The dollar value also pales in comparison: $28.5 billion this year versus $48.7 two years ago.

"The unexpected and novel events surrounding COVID-19 took a toll on the global health of equity markets," says Paul Go, EY global IPO leader, "and together with other global market factors, have caused market turbulence last seen only during the global financial crisis of 2008.

"This extreme market volatility makes any ambitions to go public highly uncertain, both in terms of timing and valuation." 

Surprisingly, given that China was the first to experience the effects of the coronavirus, the nation accounted for 90 IPO deals worth $13.2 billion. Asia-Pacific overall was responsible for 160 deals totaling $16.8 billion, a 28% and 110% increase respectively compared with Q1 2019.

EY Asia-Pacific IPO Leader Ringo Choi, noting that Covid-19 had "some impact on IPO activity," predicted that "with government policies and economic stimulus packages in place, IPO markets should see some improvement in the quarters to come."

In the Americas, where the US accounted for 24 IPOs worth $7.3 billion, "Covid-19 and oil tensions have largely dried up IPO activity for now, " observed Jackie Kelley, EY Americas IPO leader. She added that "The IPO pipeline is growing, as issuers look for opportunities to be prepared for calmer and more conducive markets."

Despite that optimism, the EY report announcement says, " IPO markets are not expected to quickly rebound in Q2 2020. However, while Q3 is typically a slower time of the year, there may be increased IPO activity as the market attempts a reset and the global pipeline looks for the next IPO window."

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