Press release

IPO market strong in 4Q16; trend to continue in 2017

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  • Exchanges by contrast made the biggest gains of any territory globally; recording a 79% uptick in proceeds on a 38% increase in deal volume (83 IPOs raising US$3.8b in 2016)
  • India’s Bombay Main Market and SME board saw 66 IPOs raising US$3.8b in 2016 while National SME recorded 17 IPOs raising US$19m

New Delhi, 27 December 2016: Last quarter witnessed a robust performance for IPOs in India and this promising trend is expected to reverberate during next year, according to the quarterly EY Global IPO Trends: 2016 4Q.

IPO activity on Indian stock exchanges saw 83 IPOs raising US$3.8b altogether in 2016 – which is the total of Bombay Main Market and SME board as well as National Stock Exchange and SME board. India’s Bombay Main Market and SME board are ranked seventh most active in terms of number of deals globally and IPO activity is at a six-year high.

Globally, entrepreneurial and investor confidence was challenged throughout 2016 by heightened political and economic uncertainty. As a result, the number of IPOs in 2016 fell 16% year-over-year (YOY) to 1,055 and capital raised was down by 33% to US$132.5b. However, NYSE (US$13.6b and 34 deals), NASDAQ OMX (US$9.2b and 49 deals) and NASDAQ (US$7.4b and 77 deals) featured amongst the top 6 exchanges by funds raised.

India was the standout performer at the country level, recording a 38% increase in deal volume and a 79% surge in proceeds raised, driven by stronger economic fundamentals and a pro-business political regime.

Continuing regulatory reforms and positive investment climate has helped India dominate in terms of number of deals. The report has also noted that rapid growth markets represent 60% of global IPO volume in 4Q16 YTD. Continuous changes in investment climate in India and further policy improvements like implementation of GST could fuel even more demand resulting in need for equity and more action in the IPO market place.

In terms of cross-border activity, 4Q16 YTD saw 21 deals raising US$6.5b in total. There were three deals from Bermuda (US$1,652m), two deals from Israel (US$34m) and one each from Argentina (US$323m) and India (US$61m).

While technology, industrials and healthcare are the top three sectors trending globally as the report suggests, the new generation sectors like renewable energy are likely to show higher activity in India in addition to the traditional Banking, Insurance and Consumer goods sectors. Government’s plans to revive strategic Public sector disinvestment may further add to market activity in India.

Looking beyond Europe and the Middle East, India is likely to remain the key highlight of IPO activity in 2017. With a supportive political backdrop, upbeat economic sentiment, improved business confidence, easing inflationary pressure and stable foreign direct investment inflows, the India has an impressive pipeline of IPOs for 2017.

Global findings

Asia-Pacific dominates global IPO activity

Asia-Pacific was the epicenter of global IPO activity in 2016, accounting for 54% of global capital raised and 60% of IPOs by volume, marking the region’s third year of successive gain in share of global activity by deal number. A total of 638 IPOs raised US$71.5b, down 6% and 21% respectively on 2015, which had been driven by a standout first six months, especially from Greater China. Six of the top ten global IPOs took place on Asia-Pacific exchanges, with Greater China representing the engine room of regional IPO and the world’s most active IPO market in 2016, hosting 331 IPOs raising US$46.2b.

EMEIA sees divergence between developed and emerging markets

Despite increased activity in 4Q16, overall IPO activity for 2016 in EMEIA was down 25% YOY by deal volume to 285, while capital raised in 2016 fell 44% to US$37.7b compared with 2015. And while European exchanges fell 36% by deal volume and 49% by capital raised over the year, India and Africa performed very strongly. India’s exchanges made impressive gains, recording a 79% uptick in proceeds on a 38% increase in deal numbers (83 IPOs raising US$2.8b). African exchanges were not far behind, recording a leap in capital raised by 81%, albeit on the back of reduced deal volume (9 IPOs raising US$0.8b).

US IPO market poised for growth in 2017

This year was the slowest year for IPO activity since the global financial crisis in 2009. Compared with 2015, deal volume decreased by 36% with 112 IPOs, while capital raised was down 37% with US$21.3b. Financial sponsor-backed IPOs continue to drive the market, representing 56% of US new listings and 64% of proceeds in 2016. Companies that have come to public markets this year have performed well, currently trading on average 17.6% above their debut prices.

2017 outlook is upbeat, despite ongoing uncertainty

Despite many unexpected outcomes in 2016, the reaction to geopolitical events in the financial markets has been far more positive than many had predicted. Many equity markets have risen to new highs, volatility has fallen and trailing price/earning ratios are on a rising trajectory.

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Notes to Editors

About EY
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This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.

About the data

Analysis included within this press release includes all deals listed up to 2 December 2016, and EY’s expectation of deals that will close in the rest of December 2016. Data sourced from Dealogic as of 3 December 2016. January 2016 through December 2016 (i.e., 4Q16 YTD) IPO activity is based on priced IPOs as of 2 December 2016 and expected IPOs by the end of December 2016.

Appendix: January 2016-December 2016 global IPOs by sector

 

Number of deals

% global deal number

Proceeds (US$m)

% of global capital raised

Consumer products and services

113

10.7%

$9,002

6.8%

Consumer staples

57

5.4%

$5,690

4.3%

Energy

58

5.5%

$15,493

11.7%

Financials

80

7.6%

$30,849

23.3%

Health care

132

12.5%

$13,519

10.2%

Industrials

171

16.2%

$18,414

13.9%

Materials

94

8.9%

$4,383

3.3%

Media and entertainment

38

3.6%

$4,621

3.5%

Real estate

61

5.8%

$11,832

8.9%

Retail

50

4.7%

$5,047

3.8%

Technology

185

17.5%

$12,669

9.6%

Telecommunications

16

1.5%

$949

0.7%

Grand Total

1,055

100.0%

$132,469

100.0%

About EY’s IPO services

EY is a leader in helping to take companies public worldwide. With decades of experience our global network is dedicated to serving market leaders and helping businesses evaluate the pros and cons of an IPO. We demystify the process by offering IPO readiness assessments, IPO preparation, project management and execution services, all of which help prepare you for life in the public spotlight. Our Global IPO Center of Excellence is a virtual hub which provides access to our IPO knowledge, tools, thought leadership and contacts from around the world in one easy-to-use source. For more information, please visit ey.com/ipocenter.