Statistics

EXCLUSIVE: IPO Momentum Faded Late Last Year

Tom Burroughes, Group Editor, 11 January 2019

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Stock markets ended 2018 with something of a whimper, and IPOs in some markets declined, but data exclusively provided to this publication points to a mixed picture.

Initial public offering sizes fell at the final quarter of 2018 as global equity markets stuttered, although data for the year as a whole points to a relatively healthy year for these types of liquidity event, according to data exclusively made available to this publication.

There were 161 IPOs in North America last year, with a total offering size of €31.17 billion ($36.5 billion), according to figures from Wealthmonitor, a firm that tracks such corporate events. In 2016, there were 108 North American IPOs with offering sizes of €16.631 billion; in 2017, the figures were 168 and €31.355 billion, respectively.

As far as Western Europe is concerned, there were 109 IPOs, with €27.231 billion offered last year; in 2017, there were 110 such share floats, with €23.570 offered, up from 78 IPOs in 2016, offering €17.091 billion.

At the end of last year there was a drop in the value and volume of such share floats in America, but the Wealthmonitor figure showed a rise on the other side of the Atlantic. In the fourth quarter for North America, there were 25 IPOs, with an offering size of €4.041 billion, down from €8.333 billion a year before. In Western Europe there were 19 IPOs, with an offering size of €7.312 billion.

In Asia, as reported a few days ago, initial public offerings in Hong Kong raised a total of HK286.5 billion ($36.6 billion) in 2018, surging 123 per cent from the level chalked up in 2017, according to PricewaterhouseCoopers. There were a record-breaking 218 new listings in 2018 in terms of numbers of IPOs, of which 143 were main board listings, mostly comprising retail, consumer goods and services companies followed by industrial companies. However, the number of GEM Board [Growth Enterprise Market] new listed companies in 2018 fell from a year earlier, PwC said.

Other data

Equity markets fell last year, and some other reports said that IPOs volumes and values have fallen off.

In London, 79 companies listed, raising a total of $12.1 billion, a 23 per cent drop in capital from 2017, according to EY. That downward trend is expected to continue this year, that firm said.

Uncertainties on how or whether the UK will leave the European Union appears to be weighing on the willingness of firms to list on the London market, although ironically it may also crimp such activity on the continent of Europe as well.

Other data suggests that in the US, total IPOs by number actually rose last year. According to the Statista news portal, there were 190 such floats in 2018, from 160 in 2017 and 105 in 2016, but down from 275 in 2014. In 1999, at the height of the dotcom boom, there were 486 IPOs, and that collapsed to 84 in 2001, but the nadir since 1999 has been the great financial crisis year of 2008, when only 31 firms made their stock market debut in the US.

Source: Statista

IPOs, along with trade sales, exercises of share options and business exits from private equity deals are liquidity events helping to mint new high net worth individuals. As a result, wealth managers track such data to get a better handle on where the next generation of clients will come from.

The annual Capgemini report on the fortunes of the world’s high net worth and ultra-HNW individuals has shown wealth expanding as stock and other markets have risen over the past decade. The drop to stocks in 2018 is likely to dent such wealth when the next round of data comes out, however.

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