Global IPO Trends 2015 4Q

16 Pages·2015·0.95 MB·English

EY Global
IPO Trends
2015 4Q
IPOs maintain appeal in a multitrack w orld
A fter last year’s record-breaking level of activity, the volume of A s a consequence, we may see the balance shift in favor of a
global IPOs in 2015 fell by 2% to 1,218 IPO listings and total new kind of IPO, in which bigger, more stable businesses come
capital raised declined by 25% to US$ 19 5.5b. Even excluding to the public markets later in their life cycle, driven not so
the A libaba Group H olding Ltd. IPO in 2014, global proceeds much by funding needs, but by strategic motivations, such as
in 2015 were 17 % lower than in 2014. H owever, rather than securing a higher brand profile and the opportunity to access
re(cid:214)ecting a lackluster performance, these global IPO activity new markets via cross-border listing opportunities.
levels illustrate the difficulty of surpassing a bumper year and
Multitrack is here to stay
compare quite favorably to the 10-year annual global median
With capital and choice abound, our EY teams have observed
of 1,241 deals and US$ 17 6.1b in annual IPO proceeds. T hey
that private companies are increasingly looking to keep their
also re(cid:214)ect divergent performance across regions in a higher
strategic fundraising options open(cid:38) Private (cid:61)(cid:105)uity firms have
volatility environment and the greater range of financing
been utiliz ing the multitrack strategy to maximiz e investment
options now available.
value for their exit for the last 20 years. Pursuing a multitrack
Indeed, corporate confidence is high and fundraising continues strategy is an increasingly important trend that will gain in
apace even though IPO activity was unable to match last year’s strength as companies weigh private funding options against
records. 2015 saw the proliferation of alternative private and trade sale, merger, acquisition or traditional IPOs.
corporate capital, which increased the choice of funding choices
for companies needing to scale quickly. A s a consequence, we Investors are adjusting to higher volatility
believe that multitrack strategies are here to stay. In addition, Stock market volatility, as shown by the C hicago B oard Options
the October 2015 edition of EY’s Global Capital Confidence Exchange (C B OE) V olatility Index® (V IX ® ), spiked higher between
Barometer1 found that companies are pursuing deals at a rate mid-A ugust and September 2015, rising close to levels last
not seen this decade with global M& A value approaching seen during the market turmoil of 2011. T raditionally, levels
record highs. of the V IX Index in excess of 20% to 25% have been associated
with an increase in the number of postponed or withdrawn IPOs
T he growing diversity of the funding ecosystem has been
and a marked decline in global IPO activity. V olatility impacts
evident throughout this year, with the US and Europe in the
the opening and closing of the IPO window in the short-term
vanguard of the trend. We believe that these changes are an
and stock market pullbacks amid increased volatility can also
emerging structural trend, which will continue to be a crucial
increase the relative attractiveness of trade sales and M& A
driver for global IPO activity in 2016.
compared with an IPO.
Predictions for the global IPO market based on H owever, IPO activity snapped back sharply higher in October,
suggesting that this historical relationship may now be less
activity in 2015
pronounced. Investors appear to be getting more comfortable
with a higher volatility market backdrop — and in turn companies
Structural change is taking place
are gauging that investor appetite remains strong during
(cid:76)he rise of alternative private financing markets operating at
these periods for new listings(cid:38) In part this may re(cid:214)ect that in
scale alongside the traditional capital markets in the US and
a financial system characteri(cid:114)ed by low returns across asset
Europe has impacted the number of technology companies
classes, investors retain their appetite for risk as a means of
listing. F or example, technology IPOs on US exchanges were
generating superior returns.
47 % lower in 2015 by deal number and 27 % lower by proceeds
(when we excluded the US$ 25.0b IPO of A libaba Group H olding N onetheless, spikes in volatility still retain the ability to shut
Ltd. in 2014) compared to 2014, raising only US$ 8 .1b through IPO windows. T he market correction from mid-J une to early
IPOs, compared with an estimated US$ 20b through private J uly in C hinese equities prompted regulators to suspend IPO
offerings2 in the first si(cid:112) months of (cid:42)(cid:40)(cid:41)(cid:45) alone(cid:38) activity on Mainland C hina exchanges temporarily, which also
acted as a brake on IPOs in H ong Kong. Market corrections
A number of factors are driving this trend. IPOs generally take
in C hinese equities amid concerns over the slowing pace of
at least two years to plan, but access to private capital is much
C hinese economic growth also undermined investor sentiment
quicker, enabling companies that need to scale rapidly with the
in developed market equities, illustrating the increasingly
chance to lock in the funding they need to generate competitive
interconnected nature of global stock markets.
advantage sooner. Other factors in favor of alternative capital
include the narrowing of the valuation gap between public and
Chinese activity w ill rebound as IPO w indow re-opens
private capital (i.e., the difference between market valuation at
C hinese exchanges re-opened to new listings in December
IPO and at last rounds of fundraising prior to IPO), which makes
and there is a strong pipeline of IPO-ready businesses, with
it harder to achieve and sustain the first(cid:37)day pop(cid:38) Investors are
around 69 0 companies ready to go public. Investor sentiment
increasingly prepared to invest greater amounts into private
has been buoyed by reforms to mainland C hina’s IPO system
companies and at a later stage of their development. T he
to be implemented in 2016, which will see a shift to a market-
investment protection sometimes offered to shareholders as
oriented registration process. 4Q 15 IPO activity on the H ong
part of private transactions lends further appeal to such deals.
Kong Main Market was strong, making it the world’s most active
1Global Capital Confidence Barometer: companies embrace sustainable M&A, EY, www.ey.com/ccb, October 2015.
2Leslie H ook, “Private share trading takes off as technology companies shun IPOs,” Financial Times, 2 J une 2015, www.ft.com/cms/s/0/27 e9 444c-08 7 9 -11e5-8 5de-00144feabdc0.html# axzz3 tG6dftlT.
2 |
exchange by capital raised this year, and we expect a healthy and abroad. Looking further ahead, the US Presidential election
appetite for new listings to persist in the coming year. in N ovember 2016 creates another source of uncertainty and
we expect that IPO activity in 2016, particularly in the US, may
Solid fundamentals w ill underpin key geographies
be a stop-start affair.
T he People’s B ank of C hina (PB OC ) is among the major central
banks continuing to support growth through easy monetary From grow th to value
policy, a strategy also being pursued by the European C entral T he likely start of an interest rate increase cycle in the US
B ank (EC B ) and the B ank of J apan. T he EC B has kept the should also impact on the sectoral pattern of activity. A s interest
interest rate at a low level and announced its willingness to rates rise, typically late in the economic cycle, investors tend
continue to purchase bonds for longer than originally expected. to switch out of growth stocks in favor of value stocks, and a
similar pattern can be expected in the sector distribution of new
Low interest rates and quantitative easing are one of a number
listings. C onsumer products and retail IPOs are two areas likely
of supportive fundamentals underpinning IPO activity in Europe.
to benefit from this shift(cid:38)
In addition, lower energy prices provide a boost to consumption,
while the weakening trend in the euro over the last year has In terms of investment rationale, we expect three themes to
provided a boost to European exporters and supports investor persist in 2016:
interests in euro-denominated IPOs.
1. C onglomerates spinning off non-core businesses as they
T he US economy also remains in solid health, with a seek to strategically optimiz e their portfolios
strengthening housing market and improving job market.
2. B udget-constrained governments listing SOEs
Positive data releases on exports, retail sales, plus continued
3 . Disruptive technology companies following dual-track
low oil prices and improving consumer sentiment suggest that
strategies
positive momentum will be sustained through the end of the
year and into 2016. With stock markets high and volatility In the latter category, it would be sensible to avoid reading
reducing, the backdrop is more positive for IPOs in the next few too much into the recent poor stock market performance of a
months than earlier in 2015. few high(cid:37)profile technology listings in the (cid:77)(cid:75) as an indicator
of worsening sentiment across the sector. C apital continues to
Policy divergence w ill create uncertainty
(cid:214)ow into the technology sector, hence the growing number of
(cid:68)ooking ahead to (cid:42)(cid:40)(cid:41)(cid:46), a significant change compared with
“unicorn” companies, and we expect interest to remain high
this year is the imminent divergence between monetary policy
from private and public capital markets.
in the US and in the other major economies. T he case is building
for a rise in (cid:77)(cid:75) interest rates as confidence grows that in(cid:214)ation Cautious mood means companies must be ready
will rise closer to the F ederal R eserve’s 2% target. A ny rise is to move fast
expected to be small3 and the consensus view is that the sooner Overall, we are cautiously optimistic on the global IPO outlook
interest rates are increased the better. for 2016, but companies of all types and across all sectors
should be mindful of the need to keep their options open in an
N onetheless, the uncertainty created by the looming change
increasingly multitrack world and to be prepared to act quickly
in (cid:77)(cid:75) monetary policy is likely to be re(cid:214)ected in IPO activity in
when needed to take advantage of IPO windows as they open.
2016. If, as expected, the F ederal R eserve does raise rates in
December, this could contribute to a relatively slow start to IPO Maria Pinelli
activity in 2016, as investors and companies wait to see the Global V ice C hair, Strategic Growth Markets, EY
reaction of equity markets to the policy change, both in the US
Global IPO and M&A by deal numbers Global IPO and M&A by deal value
Global IPO and M& A by deal numbers Global IPO and M& A by deal value
12,000 600 1,400 140
10,000 500 1,200 120
Number of M&A deals 468,,,000000000 234000000Number of IPO deals M&A deal value (US$b)1,468000000000 468100000IPO deal value (US$b)
2,000 100 200 20
0 0 0 0
1Q072Q073Q074Q071Q082Q083Q084Q081Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q131Q142Q143Q144Q141Q152Q153Q154Q15 1Q072Q073Q074Q071Q082Q083Q084Q081Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q131Q142Q143Q144Q141Q152Q153Q154Q15
Number of M&A Number of IPOs M&A deal value IPO deal value
Note: 4Q15 M&A activity is based on announced M&A deals from October and November 2015, and 3Q15 IPO activity is based on pricedIPOs Note: 4Q15 M&A activity is based on announced M&A deals from October and November 2015, and 3Q15 IPO activity is based on pricedIPOs
NfroomteO:c 4tobQer1 a5nd MNo&veAm baecr 2t0iv15it.y is based on announced M& A deals from October and N ovember 2015, NfroomtOec:t o4beQr 1an5d NMov&emAb ear c20t1iv5.ity is based on announced M& A deals from October and N ovember 2015,
aPnadge 31Q 15 IPO activity is based on priced1 QIP15O Gslo bfarlo IPmO uOpdcatteober and N ovember 2015. aPangde 23 Q 15 IPO activity is based on price1dQ 1IP5 OGlosb aflr IoPOm u pOdactetober and N ovember 2015.
3 Futures markets put a 7 5% probability on a 0.25% rate increase at the Fed’s meeting in December, according to the C hicago Mercantile Exchange. See J ohn H ilsenrath and David H arrison, “Yellen Signals Fed on
Track to R aise R ates in December,” Wall Street Journal, (cid:42) (cid:60)ecember (cid:42)(cid:40)(cid:41)(cid:45)(cid:38) http(cid:50)(cid:39)(cid:39)www(cid:38)ws(cid:98)(cid:38)com(cid:39)articles(cid:39)feds(cid:37)yellen(cid:37)e(cid:112)presses(cid:37)confidence(cid:37)in(cid:37)u(cid:37)s(cid:37)economy(cid:37)ahead(cid:37)of(cid:37)december(cid:37)meeting(cid:37)(cid:41)(cid:44)(cid:44)(cid:49)(cid:40)(cid:47)(cid:47)(cid:41)(cid:42)(cid:45)(cid:38)
| 3
Volume and value Asia-Pacific tops the leaderboard
Global IPO
Top three deals in 4Q15
US exchanges
US
highlights
ranked third by
17% Japan Japan Netherlands
global funds
US$5.7b US$5.0b US$4.1b
raised.
4Q15 YTD 1,218 US$195.5b Japan Post Japan Post ABN AMRO
Holdings Co., Ltd. Bank Co., Ltd. Group NV
(January–December 2015)4
deals globally in capital raised
(2% decrease on 4Q14 YTD) (25% decrease on 4Q14 YTD)
Commentary Rapid growth vs. developed
Rapid-growth
“2015 was a stop-start year and overall we expect something
similar for 2016, although we’re cautiously optimistic the markets represent
outlook could improve. The economic fundamentals are strong 55% of global Asia-
in most developed economies and any impending changes to Pacific
IPO volume
monetary policy have been well signaled. With stock markets
46%
riding high and a lack of competition from other asset classes, during 4Q15
investors remain keen to back equities as a source of potentially
YTD.
higher risk and return. Volatility, electoral uncertainty and the Asia-Pacific
h
impact of geopolitical shocks will all impact the market in 2016, wt led by global
though we note evidence that IPOs have been more resilient to o d
r e funds raised.
volatility spikes this year than in past years.” g p
o
d l
Maria Pinelli pi ve 1% 1%
Global Vice Chair, Strategic Growth Markets, EY a e Number of deals Value of deals
R D Central and Central and
South America South America European
Europe
EMEIA28%
35% exchanges
Financial investors remain a Three sectors trending 55% EMEIA 46% 32% ranked second
Asia-Pacific
key driver Asia-Pacific by global funds
PE and VC account AmNeorrictha 16% North raised.
18%
America
for 18% of global IPOs
(219 deals)
18%
Top six exchanges by funds raised
of global 34% by proceeds
IPOs Industrials Health care Technology
(US$66.2b)
205 deals 205 deals 177 deals
HKEx NYSE SSE LSE TSE NASDAQ
(US$31.9b) (US$15.7b) (US$23.1b)
Main and GEM New York Shanghai Main and AIM Tokyo NASDAQ
US$33.5b US$19.5b US$17.6b US$15.0b US$14.5b US$13.8b
Equity markets continue their recovery in 4Q15
(117 deals) (54 deals) (89 deals) (62 deals) (23 deals) (119 deals)
After the sharp rise in August, There were 51 withdrawn Home and away Top six countries by deal volume6
VIX
4Q15 saw the VIX® fall toward or postponed deals in
Cross-border listings were
304
a pre-crisis level, signaling 4Q15, which was higher
8% of global IPOs during
increased investor confidence than the 48 deals in 4Q14.
4Q15 YTD as compared to 10%
and liquidity. 139
during 4Q14 YTD.
99
73 70 57
Rising equity markets bode well 86% of IPOs priced
for 4Q15 and 2016 IPO activity; within or above
China US Japan Australia South India
MSCI World Index continues to expectations.5
Korea
recover toward pre-August level.
Home Away 4. 4Q15 YTD (January–December 2015) is based on priced IPOs as of 4 December and expected IPOs by
end of December.
5. Focus on open-price IPOs with deal value above US$50m.
6. Based on the listed company domicile nation.
4 |
Volume and value Asia-Pacific tops the leaderboard
Global IPO
Top three deals in 4Q15
US exchanges
US
highlights
ranked third by
17% Japan Japan Netherlands
global funds
US$5.7b US$5.0b US$4.1b
raised.
4Q15 YTD 1,218 US$195.5b Japan Post Japan Post ABN AMRO
Holdings Co., Ltd. Bank Co., Ltd. Group NV
(January–December 2015)4
deals globally in capital raised
(2% decrease on 4Q14 YTD) (25% decrease on 4Q14 YTD)
Commentary Rapid growth vs. developed
Rapid-growth
“2015 was a stop-start year and overall we expect something
similar for 2016, although we’re cautiously optimistic the markets represent
outlook could improve. The economic fundamentals are strong 55% of global Asia-
in most developed economies and any impending changes to Pacific
IPO volume
monetary policy have been well signaled. With stock markets
46%
riding high and a lack of competition from other asset classes, during 4Q15
investors remain keen to back equities as a source of potentially
YTD.
higher risk and return. Volatility, electoral uncertainty and the Asia-Pacific
h
impact of geopolitical shocks will all impact the market in 2016, wt led by global
though we note evidence that IPOs have been more resilient to o d
r e funds raised.
volatility spikes this year than in past years.” g p
o
d l
Maria Pinelli pi ve 1% 1%
Global Vice Chair, Strategic Growth Markets, EY a e Number of deals Value of deals
R D Central and Central and
South America South America European
Europe
EMEIA28%
35% exchanges
Financial investors remain a Three sectors trending 55% EMEIA 46% 32% ranked second
Asia-Pacific
key driver Asia-Pacific by global funds
PE and VC account AmNeorrictha 16% North raised.
18%
America
for 18% of global IPOs
(219 deals)
18%
Top six exchanges by funds raised
of global 34% by proceeds
IPOs Industrials Health care Technology
(US$66.2b)
205 deals 205 deals 177 deals
HKEx NYSE SSE LSE TSE NASDAQ
(US$31.9b) (US$15.7b) (US$23.1b)
Main and GEM New York Shanghai Main and AIM Tokyo NASDAQ
US$33.5b US$19.5b US$17.6b US$15.0b US$14.5b US$13.8b
Equity markets continue their recovery in 4Q15
(117 deals) (54 deals) (89 deals) (62 deals) (23 deals) (119 deals)
After the sharp rise in August, There were 51 withdrawn Home and away Top six countries by deal volume6
VIX
4Q15 saw the VIX® fall toward or postponed deals in
Cross-border listings were
304
a pre-crisis level, signaling 4Q15, which was higher
8% of global IPOs during
increased investor confidence than the 48 deals in 4Q14.
4Q15 YTD as compared to 10%
and liquidity. 139
during 4Q14 YTD.
99
73 70 57
Rising equity markets bode well 86% of IPOs priced
for 4Q15 and 2016 IPO activity; within or above
China US Japan Australia South India
MSCI World Index continues to expectations.5
Korea
recover toward pre-August level.
Home Away 4. 4Q15 YTD (January–December 2015) is based on priced IPOs as of 4 December and expected IPOs by
end of December.
5. Focus on open-price IPOs with deal value above US$50m.
6. Based on the listed company domicile nation.
| 5
US IPO runway extends with robust
private markets
After a banner 2014, in which US exchanges led the world and the traditional capital markets. Certainly, we were starting to
IPO activity hit their highest level since 2000, it is not surprising see a marked decrease in the number of technology companies
that US IPO activity was more subdued by comparison in 2015. coming to market — a sector which had been considered a
At 173 IPOs, US deal numbers in 2015 were down 41% on 2014, mainstay of US IPO activity.
but only 5% below the 10-year median annual IPO deal number
By the end of the year we see that technology IPOs have
of 183 IPO listings. At $33.3b, capital raised was down 65% on
fallen 47% by deal numbers and 77% by proceeds compared to
2014, reflecting the decline in median deal sizes.
2014, raising only US$8.1b through IPOs, compared with an
• By deal numbers, US exchanges ranked fourth in 4Q15 and estimated US$20b raised through private offerings8 in the first
ranked second in 2015, second to Mainland China exchanges. half of 2015, as financial sponsors, corporates and institutional
By capital raised, US exchanges were third highest in 4Q15 and investors make late stage investments in technology companies.
led globally for 2015.
Three primary factors are driving this private market investment
• The US hosted two of the world’s 20 largest IPOs in 4Q15: trend. First, capital is readily available across the global
First Data Corp., which raised US$2.8b on New York Stock private markets, including financial sponsors, corporates and
Exchange (NYSE) and Ferrari NV, which raised US$982m institutional investors. Second, the value gap between public and
on NYSE. private capital has narrowed, thereby making M&A and other
• Although the number of financial sponsor-backed IPO deals private capital transactions very appealing. And third, IPOs
has declined in line with the overall global trend, financial are generally at least two years in the planning, making access
sponsors remained key players, accounting for 63% of IPO to private capital, which is often much quicker to obtain,very
deals and 69% by capital raised. attractive to companies in the technology sector that need
growth capital to scale and maintain competitive advantage.
Economic backdrop is broadly positive for IPOs
The US economy remains in solid health with positive data Multitrack is here to stay
releases across a full range of indicators from housing through As a consequence of these changes, and with capital and choice
employment to consumer demand. With volatility reducing, abound, our EY teams have observed that private companies
there is no shortage of buying interest, with strategic investors increasingly look to keep their strategic fundraising options open.
continuing to see opportunities based on solid economic Pursuing a multitrack strategy is an increasingly important trend
fundamentals. This reasoning is sound. Although there has that will gain in strength as companies weigh private funding
been some pressure on valuations, 66% of IPOs in the US priced options against trade sale, merger, acquisition or traditional
within or above initial filing range in 2015. With average first-day IPO as alternative options to fund growth and deliver return
returns of 16.9% for the year overall, newly listed companies are for shareholders.
outperforming the broader market.
Optimism for an active 1H16
At -0.7%, year-to-date returns also represent good value for
With evidence building that companies, banks and investors
investors in a year when both the S&P 500 and the Dow Jones
have grown more comfortable with higher levels of volatility, we
Industrial Average posted negative year-to-date performance
anticipate that uncertainty over potential interest rate rises and
(-0.5% and -1.9% respectively). However, with investors becoming
the results of the presidential election in November 2016 will
wary of high valuations, particularly for technology and unicorn
not dent investor enthusiasm for well-priced and well-led IPOs
stocks, companies will need to judge their pricing
coming to market at the right time in 1H16. The pipeline of IPO-
strategies carefully.
ready companies continues to grow with many continuing to take
Health care leads the way in 2015 advantage of confidential filing under the JOBS Act provisions.
Health care topped the leaderboard in terms of deal volume with We estimate that more than 100 non-confidential filers are
78 deals, accounting for 45% of IPOs, ahead of technology (14%) registered and ready to list when the IPO window opens.
and financials (8%). Technology was the leading sector in the US
by proceeds in 2015, accounting for 24% of capital raised in
the year to date, ahead of health care and energy with 22%
and 16% respectively.
Private market financing extends IPO runway
The decline in technology IPOs led us to question in our EY
Global IPO Trends: 2015 Q2 report7 whether a structural change
was underway in the US fundraising landscape with the rise of
alternative private financing markets operating at scale alongside
7 EY Global IPO Trends: 2015 Q2, EY, June 2015, ey.com/Publication/vwLUAssets/ey-global-ipo-trends-report-2015Q2/$FILE/ey-global-ipo-trends-report-2015Q2.pdf.
8 Leslie Hook, “Private share trading takes off as technology companies shun IPOs,” Financial Times, 2 June 2015.
6 |
US IPO Volume and value
highlights
4Q15 YTD
US$33.3b
173 deals
(January–December 2015)9
in capital raised
(41% decrease on 4Q14 YTD)
(65% decrease on 4Q14 YTD)
Key trends Commentary
• Steady economic growth and sustained strength “The fundamentals of the US IPO market are changing. The US Jobs Act
in the equity markets will help to ensure IPOs served as a catalyst for this by allowing many companies to file
retain their allure, but with investors becoming confidentially, test the waters, and raising the number of shareholders a
wary of high valuations, companies will need to private company can take in to 2,000 before requiring them to file publicly;
judge their pricing strategies carefully. however, it was truly the combination of the accessible capital and investors
• Choice is likely to remain a key feature of the strong interest to acquire equity in companies at an earlier stage of their
lifecycle that dramatically impacted the IPO markets this year. Traditionally,
US fundraising landscape with many fast-
businesses look to IPOs for the capital injection to fund growth, but over 70
growth, technology-enabled companies looking
private companies in 2015 were able to raise funds with valuations over $1
increasingly to the private capital markets to meet
billion. Investors often refer to this as a “private IPO.” The result was that
their short-term needs. there were over nine times the number of private tech IPOs
• Financial sponsors will continue to underpin US than actual initial public offerings of tech companies
on the US exchanges in 2015.” Jackie Kelley
IPO activity.
EY Americas IPO Leader
Financial sponsors drive Three sectors trending
US IPO market
PE and VC account for
63% of US IPOs (109 deals)
63%
69% by proceeds
of US IPOs (US$22.9b) Health care Technology Financials
78 deals 25 deals 13 deals
(US$7.3b) (US$8.1b) (US$1.2b)
IPO pricing and performance10
+16.9% first-day Equity indices11
average return
DJIA -1.9%
-0.7% decrease in offer price
vs. 4 December S&P 500 -0.5%
US$429.0m median post-IPO VIX® -19.3%
market cap
IPO activity Cross-border activity in 4Q15 YTD from
NYSE NASDAQ 16
Europe deals (US$2.8b)
4Q15 YTD 54 deals 119 deals Israel 8 deals (US$454m) US
(US$19.5b) (US$13.8b)
7
Greater China deals (US$279m)
117 deals 174 deals
4Q14 YTD
(US$73.9b) (US$22.2b)
New registrations
9. 4Q15 YTD (January–December 2015) IPO activity is based on priced IPOs as of 4 December 4Q15 33 deals, US$4.0b
and expected IPOs by end of December.
10. Pricing and performance is based on 171 IPOs of NYSE and NASDAQ that have started 4Q14 69 deals, US$8.7b
trading by 4 December. Data as of 4 December.
11. Year-to-date returns of equity indices as of 4 December.
| 7
Asia-Pacific leads the way
(cid:57)sia(cid:37)Pacific was the world(cid:204)s leading region in (cid:42)(cid:40)(cid:41)(cid:45), in terms in 2014. T he combination of investor caution in response to
of number of IPOs and capital raised. T he region accounted for volatility in global equity markets; a shift over the last few
55% of global deal numbers and 46% of global capital raised in months toward smaller deal siz es; and a greater sensitivity to
2015. T he region was once again characteriz ed by the breadth of pricing putting valuations under pressure would explain some of
destinations for companies looking to go public; around 20 stock the drop in proceeds in 2015.
e(cid:112)changes across (cid:57)sia(cid:37)Pacific hosted IPOs in (cid:42)(cid:40)(cid:41)(cid:45)(cid:38)
H owever, we note that the picture at the end of the year in 4Q 15
• (cid:79)ith (cid:46)(cid:47)(cid:43) IPOs in (cid:42)(cid:40)(cid:41)(cid:45), (cid:57)sia(cid:37)Pacific e(cid:112)changes were ahead of was more positive. A fter a seasonal lull in the third quarter due
EMEIA exchanges (3 46 IPOs) and N orth A merican exchanges to the reporting period for A ustralian companies, there was
(18 8 IPOs), accounting for 55% of global deal numbers. a pickup in IPO activity in 4Q 15. 4Q 15 saw 3 7 IPOs raising
• (cid:58)y proceeds, (cid:57)sia(cid:37)Pacific raised (cid:77)(cid:75)(cid:28)(cid:49)(cid:40)(cid:38)(cid:42)b, compared to US$ 1.5b altogether, a 13 1% rise by deal numbers and 62%
EMEIA exchanges (US$ 67 .1b) and N orth A merican exchanges increase by capital raised compared to 2014 activity levels.
(US$ 3 5.7 b), accounting for 46% of global capital raised. Looking at 2015 as whole, companies from the technology,
• Seven of the world’s busiest exchanges by number of IPOs in consumer products and health care dominated by number of
(cid:42)(cid:40)(cid:41)(cid:45) were in (cid:57)sia(cid:37)Pacific, while four of the world(cid:204)s busiest IPO listings, while consumer staples, technology and consumer
exchanges by IPO proceeds were in this region. products led by capital raised. T he year’s largest IPO listing
• J apan Post H oldings C o., Ltd. and J apan Post B ank C o., Ltd. in (cid:57)ustralia took place in October when P(cid:61)(cid:37)backed financial
were the world’s two largest IPOs in 2015; three others from technology company Link A dministration H oldings Pty. Ltd.
the region made the top ten, giving (cid:57)sia(cid:37)Pacific a (cid:45)(cid:40)(cid:29) share of raised US$ 68 3 m on the A ustralian Securities Exchange (A SX ).
top ten global deals in 2015. With technology an emerging industry in the region, we expect to
see more listings from companies in that sector in 2016.
Strong year in Japan finishes on a high
A s we look ahead to 2016, the pipeline remains relatively solid and
J apan saw a consistent level of deal activity across all four
there is cautious optimism as a number of private companies that
quarters in 2015. T here were 9 8 IPOs — the highest number
have seen rapid revenue increases in recent years prepare to list.
since 2007 — raising US$ 15.6b. 2015 activity was 18 % higher
F or 1Q 16 in particular, a number of IPOs that were postponed in
by deal numbers and 3 5% higher by IPO proceeds compared
the fourth quarter of 2015 by companies opting to take additional
to 2014 where there were 8 3 new listings with proceeds of
time to get ready for the public markets are expected to list.
US$ 11.6b.
Like other regions around the world, A ustralian and N ew Z ealand
T he highlight of the year was J apan Post’s triple IPOs, which
companies are increasingly pursuing multitrack funding and value
saw J apan Post H oldings C o., Ltd., J apan Post B ank C o., Ltd.
realiz ation strategies as a matter of course. While the IPO outlook
and J apan Post Insurance C o., Ltd. raise US$ 5.7 b, US$ 5.0b and
for 1Q 16 is broadly positive in this region, we anticipate that not
US$ 1.2b respectively on the T okyo Stock Exchange in N ovember.
all businesses will see their funding journey conclude with an IPO.
T he listings of J apan Post H oldings C o., Ltd. and J apan Post
B ank C o., Ltd. were the two largest IPOs globally in 2015 and
ASEAN activity remains muted
J apan’s biggest sale of state-owned enterprises in nearly three
T he picture in A SEA N remains broadly unchanged from the third
decades(cid:51) these represent the first tranche of a sale aiming to
quarter, with IPO activity subdued due to a range of factors that
raise around US$ 3 4b over the coming four to six years.
have spooked investors into adopting a “wait and see” stance.
In a strong end to the year in J apan, the fourth quarter saw a Depressed oil and commodity prices; the strength of the US
total of 3 2 IPOs raising US$ 13 .0b, compared to US$ 4.8 b in dollar and its impact on exports and growth in emerging markets;
proceeds through 42 new listings in 4Q 14. plus uncertainty over the expected interest rate rise in the US
have dampened confidence and investor sentiment(cid:38)
During 2015, the most active sectors were technology, consumer
products, retail and industrials, which were underpinned by the While C hina’s stock market sell-off seems to have calmed and
recovery in consumption. F inancial sponsors remain a key driver new listings have resumed, measures announced to restructure
with a number of private equity and venture capital exits via IPO the country’s economy and declining levels of growth are adding
in 2015. to the sense of uncertainty and volatility in the A SEA N region.
A gainst this backdrop, many companies have sought to postpone
T here was no shortage of appetite for new listings — there were
or defer their IPO plans until market sentiment improves or at
no withdrawals or postponements in the fourth quarter among
least becomes more stable.
companies that had filed for an IPO(cid:38) Investor confidence remains
strong, buoyed by the recovery of the N ikkei Stock A verage after Despite this, IPO listings in 4Q 15 have not dried up completely. In
a dip at the end of the third quarter. Looking ahead, we expect 4Q 15, there were 19 IPOs on A SEA N exchanges raising US$ 1.1b,
a similarly busy year in J apan in 2016, with around 100 new compared to 23 IPOs that raised US$ 1.1b in 3 Q 15. We are seeing
companies expected to seek access to funding via an IPO. a number of entrepreneurial companies coming to market as
these smaller IPOs are easier to execute and easier for investors
Activity in Oceania drops back
to absorb. In contrast, there is a dearth of bigger IPOs, which we
While deal volume in A ustralia and N ew Z ealand rose by 16%
may expect to line up for a 2016 debut, should market conditions
this year with 8 7 IPOs compared to 7 5 IPOs in 2014, capital
improve(cid:38) In (cid:42)(cid:40)(cid:41)(cid:46), financial sponsor(cid:37)backed IPOs will likely take
raised declined by 7 1% to US$ 4.7 b in 2015 from US$ 16.3 b
center stage as P(cid:61) and (cid:78)(cid:59) firms seek to moneti(cid:114)e their investments(cid:38)
8 |
Asia-Pacific Volume and value
IPO highlights
4Q15 YTD
673 deals US$90.2b
(January–December 2015)12
(20% increase on 4Q14 YTD) in capital raised
(8% increase on 4Q14 YTD)
Key trends Commentary
• Strong fourth quarter propels Asia-Pacific to
“2015 was a year in which Asia-Pacific demonstrated not only the
the top of the global IPO leaderboard for 2015.
depth and breadth of its capital markets, but also their enduring
• Positive outlook for 2016 as Mainland China strength and appeal to investors around the world. Economic
exchanges re-open and pipeline builds in headwinds from a range of factors including uncertainty and volatility
mature economies. in China, low oil and commodity prices and exchange rate volatility
have failed to substantially impact the volume and value of IPOs across
• Upturn in investor sentiment in ASEAN may the region. And, with an improving outlook, we expect an uptick in new
lag behind other markets in the region. listings in 2016.”
Ringo Choi
EY Asia-Pacific IPO Leader
Top five exchanges by funds raised
HKEx SSE TSE SZSE ASX
Main and GEM Shanghai Tokyo Shenzhen13 Australian
US$33.5b US$17.6b US$14.5b US$8.2b US$4.7b
(117 deals) (89 deals) (23 deals) (131 deals) (86 deals)
Six sectors trending
Consumer
Consumer
Industrials Technology Health care products Materials
staples
132 deals 121 deals 73 deals 66 deals 64 deals
43 deals
(US$10.9b) (US$7.1b) (US$5.5b) (US$10.1b) (US$5.1b)
(US$4.8b)
IPO pricing and performance14
+20.6% first-day Equity indices15
average return
HANG SENG -5.8%
+61.2% increase in offer price FTSE STRAITS
-14.4%
vs. 4 December TIMES
SHANGHAI COMP +9.0%
US$139.8m median post-IPO
NIKKEI 225 +11.8% ASX 200 -4.8%
market cap
Cross-border IPOs
7
China issuers had deals that raised US$279m in total on US exchanges.
6
China issuers had deals that raised US$66m on Australian Securities Exchange.
17
ASX saw deals, six from China, four from Singapore, three from the US,
two from New Zealand and one each from Indonesia and Malaysia.
12. 4Q15 YTD (January–December 2015) IPO activity is based on priced IPOs as of 4 December and expected IPOs by end of December.
13. Shenzhen Stock Exchange includes IPO listings from the Main Board, SME Board and ChiNext.
14. Pricing and performance is based on 576 IPOs of Asia-Pacific exchanges that have started trading by 4 December. Data as of 4 December.
15. Year-to-date returns of equity indices as of 4 December. | 9
Greater China rebounds with strong fourth q uarter
Despite concerns about C hinese economic growth and market Mainland China back on track
volatility, which saw Mainland C hina exchanges suspend IPO Mainland C hina exchanges have seen a bumper year in 2015.
listings activity between early J uly and N ovember, IPO activity T here were 220 IPOs raising US$ 25.7 b, up from proceeds of
on Greater C hina exchanges16 has registered another strong US$ 12.8 b raised via 125 IPO listings last year. When comparing
year. In 2015, there were 3 44 IPO listings, up from 248 IPOs 2014 and 2015 IPO activity, it should be noted that for both years
or 3 9 % higher than last year, while capital raised was up 3 7 % to there was a 4-month suspension of IPO activity. In 2014, IPO
US$ 59 .5b. activity was suspended between March to end of of J une 2014,
whereas this year, IPO activity was suspended between J uly and
• H ong Kong (Main Market and GEM) was the world’s busiest
N ovember. When you consider that 2014’s total was surpassed
exchange in 2015 by capital raised with 17 % of global proceeds
before the mid-year market correction, which saw the regulator
(US$ 3 3 .5b), while the Shenz hen Stock Exchange topped the
put a hold on new listings in early J uly, this is an impressive story.
leader board by deal volume with 13 1 IPOs, accounting for
11% of global deal numbers. In N ovember 2015, the C hina Securities R egulatory C ommission
• A strong end to the year is expected with a number of IPOs (C SR C ) announced that IPOs would resume and the 28 IPOs
slated in December on the H ong Kong Stock Exchange (H KEx) approved by C SR C before the suspension could come to market
and mainland C hina exchanges. by the end of the year. Of these companies, the majority are
small- and medium-siz ed businesses, with technology, media and
• T he outlook for 2016 is positive with investor sentiment
telecommunications and industrials being the top two sectors
strengthened by ongoing reforms in mainland C hina.
represented.
A solid year for Hong Kong
In addition, C SR C has released a set of new measures to reform
A fter a standout 2014, the number of new listings on H ong Kong
the IPO system, indicating a further step toward a market-oriented
Main Market fell slightly in 2015 — 8 6 IPOs compared to 9 0 IPOs
registration process. Subscribers will no longer be required to
in 2014. H owever, capital raised was on an upward trend, rising
pre-pay for new shares, reducing the amount of money locked in
by 12% to US$ 3 3 .2b from US$ 29 .7 b the year before.
during the subscription period. T his will address the problem of
T wo of the year’s ten largest IPOs globally listed on H KEx. In J une overheating IPO subscriptions and help to stabiliz e the market.
2015, H uatai Securities C o., Ltd. raised US$ 5.0b, while in A pril,
T he new IPO registration system could be rolled out as soon as
GF Securities C o., Ltd. raised US$ 4.1b. With a further three
March 2016 and will see the duration of the process for companies
si(cid:114)eable financial services(cid:204) IPO listings in (cid:44)(cid:73)(cid:41)(cid:45) (cid:200) (cid:59)hina (cid:64)uarong
looking to go public reduced to around three to six months. Most
A sset Management C o., Ltd. (US$ 2.5b), C hina R einsurance
significantly, it is hoped that optimi(cid:114)ing the IPO subscription rules
(Group) C orp. (US$ 2.1b) and C hina International C apital
will ease market (cid:98)itters and restore investor confidence(cid:38)
C orporation (US$ 9 3 3 m).
(cid:76)he financial sector led on the (cid:64)ong (cid:67)ong (cid:69)ain (cid:69)arket, Positive outlook in 2016
accounting for around 51% of total IPO proceeds and was ranked A lthough there are currently around 69 0 IPO-ready companies
second by deal numbers (14% ) in 2015. B y deal volume, the on C SR C ’s waiting list, the regulator will look to control the pace
industrials and health care sectors were ranked first and third of new listings, keeping a steady rhythm in order to stabiliz e the
with 16 IPOs and 12 IPOs respectively. stock market and pave the way for the smooth introduction of the
new registration system. H KEx appears to have recovered from the
A lthough activity has been quick to resume in 4Q 15, investors
mid-year slow-down, and with around 100 companies waiting in
remain cautious on valuations following the sell-off in C hina
the pipeline to go public in 2016, a huge surge in new listings
earlier in the year, with only 20% of IPOs pricing above the middle
is expected.
of the indicative range in 4Q 15, compared to 48 % in 3 Q 15.
H owever, competitive pricing is attracting investor interest and Despite the outstanding performance this year, looking ahead, we
around 7 0% of IPOs were oversubscribed in 4Q 15. A t the same believe the outlook for stock markets across Greater C hina is still
time, performance has improved with around 7 0% of IPOs closing tempered by a number of positive and negative factors.
above their initial price on the first day of trading, compared to On the positive side, the International Monetary F und (IMF ) has
56% in 3 Q 15. voted to admit the yuan as the fifth member of its special drawing
F inancial sponsors remained a key driver of activity in 2015. rights (SDR ) currency basket, while the People’s B ank of C hina
Sixteen percent of IPOs on H ong Kong Main Market and 26% is likely to further cut interest rates and the reserve requirement
by capital raised were PE and/or V C backed. A mong these, ratio in order to release further liquidity into the market. A t the
health care, financials and consumer products were the most same time, however, concerns persist about the slowdown in C hina
represented sectors(cid:38) (cid:79)e e(cid:112)pect a high number of financial and the global economy. T here is also speculation regarding the
sponsor-backed IPOs to continue through 2016 as these likely effect of the expected interest rate rise by the US F ederal
investors look for exits. (cid:74)eserve and its impact on investor confidence and appetite for
new IPOs in 2016.
16During 4Q 15 YT D, the total IPO activity on Greater C hina exchanges consisted of IPOs on H ong Kong Main Market (8 6 IPOs, US$ 3 3 .2b); H ong Kong Growth Enterprise Market (3 1 IPOs, US$ 3 24m);
Shanghai Stock Exchange (8 9 IPOs, US$ 17 .7 b); Shenzhen Stock Exchange — the Mainboard, the SME board and C hiN ext (13 1 IPOs, US$ 8 .2b); and Taiwan Stock Exchange (7 IPOs, US$ 226m).
10 |