Big vs agile? Global IPO trends: Q4 2018 - Mega and unicorn IPOs characterize 2018 deal landscape; trend to continue in 2019 - EY
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Big vs agile?
Global IPO trends: Q4 2018
Mega and unicorn IPOs characterize
2018 deal landscape; trend to
continue in 2019
The better the question. The better the answer.
The better the world works.
Contents Global IPO market 3 Americas 7 Asia-Pacific 11 Europe, Middle East, India and Africa 21 Appendix 30 About this report EY Global IPO trends report is released every quarter and looks at the IPO markets, trends and outlook for the Americas, Asia- Pacific, Japan and EMEIA regions. The report provides insights, facts and figures on the 2018 IPO market year-to-date and analyzes the implications for companies planning to go public in the short and medium term. You will find this report at the EY Global IPO website. You can also follow the report on LinkedIn or Twitter. All values are US$ unless otherwise noted.
Global IPO market
2018 IPO activity charts a steady course
forward, despite waves of volatility
“Through a fog of uncertainty, IPO markets around the world found a
clear path forward and investment opportunities ultimately delivered
returns in 2018, as investor confidence, mega IPOs and the rise of the
unicorn companies helped provide assurance for IPO investors. While
the fourth quarter was weak, the year ended as expected, with 2018
activity held back toward the end of the year by geopolitical tensions,
trade issues between the US, China and the EU, and the looming exit of
the UK from the EU. Looking ahead to 2019, we expect a cautious
start, followed by rays of hope that should brighten IPO activity in the
second half of the year. In the meantime, it is more important than
ever for IPO candidates to remain flexible and be well-prepared to
move when the fog begins to lift.”
Dr. Martin Steinbach
EY Global and EY EMEIA IPO Leader
Global IPO trends: Q4 2018 | Page 3
Global IPO market
Highlights from the market Markets Activity Q4 2018
► Through a fog of uncertainty, IPO candidates have found a clear Change on
Change on
2018 Q4 2018 prior year
path to market in 2018, supported primarily by investor prior year
quarter Stock Sectors IPOs
confidence, large pools of liquidity, strong valuations and low exchanges
interest rates, despite equity market volatility, geopolitical tensions 1,359 21% 326 34% by highest total
by highest
number of IPOs
largest by
proceeds
and ongoing trade issues between the US, the EU and China. IPOs globally IPOs globally proceeds
While 2018 global IPO volumes declined by 21% from 2017,
$204.8b $53.7b
►
6% 10%
proceeds are up by 6%. This can be largely attributed to a number
of unicorns (40 IPOs, raising US$32.2b in total) and mega IPOs proceeds proceeds All amounts in table are in US$
that went public.
Asia-Pacific continued to be a beacon across the global IPO
Tokyo (TSE), Technology SoftBank
►
landscape in 2018, accounting for 49% of deal number and 48% by IPO activity M&A activity MOTHERS 64 IPOs Corp.
proceeds. While 2018 deal numbers were 31% lower than 2017,
and JASDAQ $21.1b
2,000 $300
40,000 $4,000 $4.3b
proceeds were up 28% year-over-year in 2018. $250 $21.6b Telecommunications
1,500
Japan
► EMEIA exchanges saw a 16% drop in deal volume and 26% $200
30,000 $3,000
30 IPOs Tokyo (TSE)
decline by proceeds in 2018 compared with 2017. An unclear 1,000 $150 20,000 $2,000
path to Brexit, political changes in Germany and Italy, and US trade
$100
and tariff uncertainties have directly impacted European and EMEIA 10,000 $1,000
Deutsche Health care Knorr-
500
economies and muted IPO activity. $50
► America’s share of global IPOs continued to improve in 2018 by 0 $0
0
2014 2015 2016 2017 2018
$0
Börse (Main 61 IPOs Bremse AG
and Scale) $4.4b
2014 2015 2016 2017 2018
deal number and proceeds. The region saw its 2018 volume and $5.1b
Number of IPOs Proceeds US$b Number of M&A Deal value US$b
proceeds exceeded that of 2017. The US dominated IPO activity, $4.6b Industrials
representing 79% of the region’s deal number and 88% by proceeds. Germany
Sources of IPOs 3 IPOs Deutsche Börse
► Technology, industrials and health care were the most prolific
sectors by deal numbers in 2018, while technology, 2018 Percentage
telecommunications and financials led by proceeds. This suggests of proceeds 72% 82% 87% 89% 90%
16%
that investors are striking a balance between growth and value
Percentage 9%
3%
Hong Kong Industrials Tencent Music
investments.
of IPOs (Main and 49 IPOs Entertainment
The proportion of cross-border IPOs increased in 2018 by deal GEM) Group
$9.4b
► 1%
1%
number, compared with 2017. The US, Hong Kong and London 1%
continue to be the favored destinations of cross-border IPOs. 90% 27%
1% 1% 1% $4.4b $1.4b
17% Media and
► Non-financial sponsored companies are an increasingly dominant 81%
13% 10% 9%
42 IPOs Entertainment
2014 2015 2016 2017 2018
source of IPOs in all markets. Moreover, ongoing uncertainties and China
volatility in global equity markets has pushed an increasing number Financial sponsor-backed Former state-owned enterprises Non-financial sponsor-backed New York (NYSE)
of financial sponsors to consider M&A as the preferred exit route. Figures may not total 100% due to rounding All amounts in table are in US$
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 4
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.
Global IPO market
Regional performance and trends
Cross-border IPOs
Percentage by number of IPOs globally
Although positive post-IPO performance has receded from previous years, first-day IPO 2018 10%
returns continue to outperform IPO offer pricing by at least 10%. These encouraging 2017 7%
returns continue to feed investor appetite, particularly for technology, industrials and 2016 6%
health care IPOs. The rise of the unicorns and mega IPOs have also helped to push 2018
2015 8%
proceeds beyond 2017 levels.
2014 10%
Regional share by number of IPOs Regional share by proceeds Top countries of origin 2018
By number of IPOs outside home country
• China (3)
2018 19% 32% 49% 2018 29% 23% 48% • Singapore (15)
• UK (12)
• US (10)
2017 13% 30% 57% 2017 27% 34% 39% • Australia (6)
Top IPO destinations* 2018
2016 12% 29% 59% 2016 17% 28% 54% By number of IPOs
• NASDAQ (33)
• NYSE (27)
2015 16% 30% 54% 2015 19% 36% 45%
• Hong Kong (23)
• London (14)
2014 25% 30% 45% 2014 38% 31% 31% • Australia (9)
Americas EMEIA Asia-Pacific
or or — = increase or decrease or remain constant for full year 2018 compared with the full year of 2017
Figures may not total 100% due to rounding. *IPO destinations refer to stock exchanges (main and junior markets).
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 5
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.
Global IPO market
Outlook EY IPO sentiment radar
► Given market volatilities and geopolitical uncertainties, the The radar contains a variety of market
strong decline in quarter-over-quarter IPO activity in all factors that may impact investor Interest
regions in Q4 2018 sends signals for a cautious start in rate hikes
2019. However, companies that do come to the public sentiment for IPOs.
markets will be of higher quality as investors become more Pre-IPO companies should analyze how
selective. The best option for IPO candidates is to ride the these factors may affect their business
wave, take the additional time to further improve their IPO
readiness and consider a multitrack approach. and valuations. These factors can ultimately
Although 2019 IPO deal numbers could be below that of have an impact on the timing and value
Implications from
►
2018 (1,150 to 1,300 IPOs), it is likely that global proceeds of their transaction in view of their
could meet or exceed the high 2018 levels.
Asia-Pacific: Heading into 2019, we expect the decline in IPO
chosen IPO destination. Oil prices changes in US
trade policies
►
activity to continue by deal numbers and proceeds. However,
if geopolitical uncertainties and market volatility stabilize, IPO
activity levels could improve in the second half of the year. Brexit
► EMEIA: US-China-EU trade tensions, Brexit, uncertainty with
respect to the stability of selected European economies, and
the potential of rising interest rates will likely continue to Potential impact Short-term
dampen IPO activity in the first half of 2019. However, with
strong fundamentals and investor confidence, EMEIA IPO ► Consider a number of volatility Geopolitical
markets will remain a dominant force globally in 2019. alternative funding or tensions
► Americas: Healthy performance in 2018 creates a supportive exit options (multitrack) Currency
backdrop for continued Americas IPO activity. The number of
companies, including multiple unicorns, considering the public ► Preserve optionality Economic growth
markets in 2019 suggests that the Americas IPO market has with early IPO readiness
much to look forward to in the year ahead.
► Sectors: Technology, industrials, health care and consumer preparations
products sectors will remain particularly active as investors ► Prepare early to complete
look to balance high returns potential, with more traditional, Stronger regulatory
less risky investments. your IPO quickly in narrow requirements
► Cross-border: We expect cross-border activity to maintain its IPO windows
momentum well into 2019, with the US, Hong Kong and ► Be flexible in timing
London continuing to be the top destinations.
and pricing
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 6
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.
Americas
Despite market volatility, 2018 Americas
IPO activity continued full-steam ahead
“Despite muted IPO activity on Central and South
America exchanges in the second half of 2018, the
IPO pipeline continues to build in the Americas. We
expect issuers that are well prepared will be able to
manage through periods of market instability.”
Jackie Kelley
EY Americas IPO Markets Leader
Global IPO trends: Q4 2018 | Page 7
Americas
Highlights from the markets Brazil‘s B3 2018
All amounts in table are in US$
► Despite the volatility, Americas IPO markets are ending on a high as year-over-year deal volumes and Change on prior year 12 $7
proceeds from 2018 exceeded 2017 numbers by 14% and 16%, respectively.
3 IPOs 10 $6
70% 8 $5
► The US exchanges accounted for 79% of Americas IPO deal numbers and 88% by proceeds. $4
$2.0b proceeds
6
$3
► Besides the US, Canada’s Toronto Stock Exchange and Venture Exchange saw 17 IPOs, which raised 65% 4 $2
US$1.1b in 2018, accounting for 7% of Americas IPOs and 2% by proceeds. There were no significant 2
$801m median deal size
$1
IPOs on Brazil’s or Mexico’s markets in the second half of 2018. 102% 0 $0
2014 2015 2016 2017 2018
► Cross-border deals accounted for 25% (65 IPOs) of 2018 Americas IPOs. 60 foreign issuers listed in Number of IPOs Proceeds US$b
the US and 5 listed on Canada’s Toronto Main and Venture Exchanges and CNQ. This signaled continued
►
confidence in Americas exchanges.
Health care, technology and financials sectors saw the highest level of IPO activity in 2018, with
Canada‘s Toronto Stock Exchange and TSX Venture Exchange 2018
health care alone contributing to 35% of deal volume, while technology and financials accounted for 22% Change on prior year 25 $4
17 IPOs
20
and 10%, respectively. These sectors accounted for 17%, 28% and 13% of proceeds, respectively. $3
19% 15
$2
$1.1b proceeds
10
59%
Markets 2018
All amounts in table are in US$ 5 $1
Change on prior year 400
300
$120
$15m median deal size 80%
0
2014 2015 2016 2017 2018
$0
261 IPOs
$80
200 IPO activity of Canadian Securities Exchange is excluded. Number of IPOs Proceeds US$b
14% 100
$40
$60.0b proceeds 16%
Mexico‘s Mexican Stock Exchange 2018
0 $0
2014 2015 2016 2017 2018
$99m median deal size 13% Number of IPOs Proceeds US$b Change on prior year 8 $4
6 IPOs 20%
6 $3
Activity Q4 2018
All amounts in table are in US$ 4 $2
$3.2b proceeds 24% 2 $1
Stock exchanges Sectors IPOs $387m median deal size 20%
0
2014 2015 2016 2017 2018
$0
by highest total proceeds by highest number of IPOs largest by proceeds Number of IPOs Proceeds US$b
NASDAQ Health care Tencent Music Entertain-
$4.3b | 27 IPOs US 23 IPOs | $2.4b
ment Group $1.4b Media and US‘ NASDAQ and NYSE 2018
entertainment, New York, China 300 $100
Change on prior year
NYSE Technology StoneCo Ltd.
$80
$3.7b | 11 IPOs US 14 IPOs | $2.8b $1.4b Technology, NASDAQ, Brazil 205 IPOs 14%
200
$60
$40
$52.8b proceeds
100
Toronto TSX and Venture Materials 31% $20
$235m | 5 IPOs Canada Moderna Inc.
7 IPOs | $395m
$111m median deal size
0 $0
$500m Health care, NASDAQ, US 4% 2014 2015 2016 2017 2018
IPO activity in 2016 includes one IPO on BATS exchange. Number of IPOs Proceeds US$b
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 8
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.
Americas — US IPO market insight
2018 US IPO markets surpass 2017
deal volume and proceeds
“The US IPO markets will finish the year strong, with both
volume and proceeds surpassing 2017 levels. A number of
unicorn companies brought IPOs to market in 2018, with
more on record stating that they will be conducting IPOs in
2019. As we head into the new year, we expect IPO volumes
to remain steady, driven by a number of high quality issuers
that have kicked off IPO processes.”
Jackie Kelley
EY Americas IPO Markets Leader
Global IPO trends: Q4 2018 | Page 9
Americas — US IPO market insight
Highlights from the market Activity Q4 2018
All amounts in table are in US$
Trends Change on
► Despite market volatility, US IPO activity saw 205 IPOs raising a 2018 prior year
total of US$52.8b in 2018, a year-on-year rise of 14% by volume and
31% by proceeds. Sectors IPOs Median deal size $111.1m 4%
by highest number of IPOs largest by proceeds
► Health care and technology sectors continue to dominate the US Median post-IPO
exchanges in 2018 by deal number and proceeds. $515.6m 1%
Health care Tencent Music Entertainment Group market cap
► Twenty-six unicorns (with total proceeds of US$15.0b) came to the 19 IPOs | $2.3b $1.4b Media and entertainment, NYSE, China Median post-IPO market cap is calculated for IPOs that were priced by 29 November.
public market in 2018, a trend we expect will continue into 2019.
► US exchanges continue to be the destination of choice for foreign Technology StoneCo Ltd.
companies. Cross-border IPOs accounted for 29% of US IPOs, with 60 9 IPOs | $2.8b $1.4b Technology, NASDAQ, Brazil Cross-border IPOs: top countries/regions of origin 2018
companies choosing to list in the US from 15 countries during 2018. Media and Moderna Inc. China 33 IPOs ($9.4b)
► Positive post-IPO price performance is keeping investors engaged Entertainment $500m Health care, NASDAQ, US
60
and encouraging more IPO candidates to come to the market. US IPOs 2 IPOs | $1.8b Europe 13 IPOs ($3.8b)
have posted average first-day returns of around 15% and average Consumer products Studio City International Holdings Ltd. Israel 4 IPOs ($158m)
current share price post-IPO is up by around 11%. $413m Media and entertainment, NYSE, Macau
2 IPOs | $318m Brazil 3 IPOs ($4.2b)
IPOs
Financials Livent Corp. Argentina 2 IPOs ($865m)
$391m Materials, NYSE, US
2 IPOs | $283m All amounts in table are in US$
Markets 2018 Change on prior year
Performance 2018
All amounts in table are in US$
Outlook
205 IPOs 14%
► Although there is limited visibility into the IPO pipeline due
$52.8b proceeds 31% IPO pricing and performance to confidential filings, there continues to be rumblings of
significant IPO activity set to take place during the
27% of IPOs are financial sponsor-backed 23% US
First-day
average return
Share price performance since
IPO (aka offer-to-current)
first half of 2019 behind the scenes.
markets ► Unicorn technology companies garner the majority of the
300 $100 Q4 2018
+ or – indicates +15.1% +10.6% headlines, but the IPO pipeline includes industry and
250 $80 change compared First-day and current average returns are mean returns of issuers who started geographical diversity as well as financial sponsor-
200
$60 NASDAQ NYSE with offer price at IPO trading by 29 November. backed companies, signaling continued strength in the US
$4.3b $3.7b IPO market.
150
100
$40 Equity indices Volatility index
$20 27 IPOs 11 IPOs ► As markets digest geopolitical developments and increased
50
CBOE VIX® uncertainty, IPO windows may narrow and issuers that
0 $0 DJIA S&P 500
2014 2015 2016 2017 2018 +87.9% | 20.7 index level are prepared to move nimbly will be rewarded.
+1.2% +1.0% YTD
Number of IPOs Proceeds US$b US US + indicates a increase in expected volatility as of
4 December 2018 compared with 29 December
IPO activity in 2016 includes one IPO on BATS exchange. All amounts in table are in US$ + or – indicates change since 29 December 2017 2017 for year-to-date (YTD).
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 10
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.Asia-Pacific
Asia-Pacific IPO markets have reached
crossroads heading into 2019
“Despite a slowdown in Q4 2018 quarter-on-quarter, Asia-
Pacific IPO markets continued to be a beacon across the
global IPO landscape in 2018. However, as we head into
2019, the Asia-Pacific IPO market has reached crossroads. If
fundamental factors improve, such as greater geopolitical
certainty, better trade relations or an increase in liquidity, we
may see improvements in IPO activity as early as the first
half of 2019. However, if fundamentals remain as they are,
we may see a short burst of activity in the first half of 2019,
but sustained improvement in IPO activity may not be
realized until the second half of the year.”
Ringo Choi
EY Asia-Pacific IPO Leader
Global IPO trends: Q4 2018 | Page 11Asia-Pacific
Highlights from the market Markets Activity Q4 2018
► Asia-Pacific continued to dominate global IPO activity in Change on
Change on
2018, despite a slowdown in Q4 2018. This region accounted 2018 prior year Q4 2018 prior year
Stock Sectors IPOs
quarter
for six of the top ten exchanges globally by deal number and
five exchanges by proceeds. 2018 deal volumes were down by exchanges by highest largest by proceeds
31% versus 2017, while proceeds were up by 28% due to a 666 31% 190 30%
by highest total
proceeds
number of
IPOs
number of mega IPOs in this region. IPOs IPOs
► In Q4 2018, a number of Asia-Pacific IPO candidates,
particularly in the technology sector, saw their valuations
decline as liquidity dried up and investors look to deleverage.
$97.1b 28% $33.4b 50%
proceeds proceeds
Poor post-IPO stock price performance over the last several Tokyo (TSE), Technology SoftBank
quarters was partly to blame. The good news is that the All amounts in table are in US$ MOTHERS
number of IPO candidates bringing their companies to 34 IPOs Corp.
and JASDAQ
market remain high, despite investor sentiment, largely $1.0b $21.1b
because the cost of capital is set to rise. However, it may take $21.6b Telecommunications
some time before IPO pricing rebounds. Main markets Junior markets 30 IPOs Japan
In Greater China, the IPO market remains a bright spot Change on Change on Q4 Tokyo (TSE)
► Q4 2018 Q4 2017
Q4 2018 2017 Japan
among global IPO markets. Hong Kong exchanges saw higher
103 87
levels of IPO activity in 2018 whereas Mainland China saw
lower levels of activity compared with 2017. 40% 14% Hong Kong Industrials Thailand
IPOs IPOs
(Main and 33 IPOs Future Fund
► In Japan, the big story in 2018 was the rise of the unicorns GEM)
(two IPOs raising US$1.5b together). In Q4 2018, technology $2.5b $1.4b
giant SoftBank Corp. went public, making it Japan’s largest
IPOs ever to date and the largest IPO in 2018 globally.
$30.9b 59%
$2.5b 14% $4.4b Industrials
Thailand
proceeds Proceeds 42 IPOs Thailand (SET)
► Australia hoped for a strong finish to 2018, but poor Hong Kong
performance of global stock markets caused many IPO 700 $100 400 $14
candidates to rethink their listings. Overall, 2018 volumes Thailand
declined 11% by volume but increased 129% by proceeds
600
$90
$80
350 $12
Materials People's
500
300
$10 (SET + MAI) 29 IPOs Insurance Co.
versus 2017. $70
250
400 $60 $8 $2.1b $1.7b (Group) of
► In Southeast Asia, geopolitical uncertainties, trade tensions $50 200
10 IPOs
$6
China Ltd.
300
and macroeconomic conditions in the region resulted in a $40
$30
150
200 $4
decline in IPO volume of 7%, while proceeds fell by 34%.
100
$20
100
50 $2
Thailand $872m
► By deal volume, industrials, technology and materials $10
Financials
0 $0 0 $0
topped the list in Asia-Pacific IPO activity in 2018; while 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
China
telecommunications, technology and financials led by proceeds. Shanghai (SSE)
Number of IPOs Proceeds US$b
► In 2018 the proportion of cross-border IPO activity by Asia-
All amounts in table are in US$ All amounts in table are in US$
Pacific companies rose by deal number, compared with 2017.
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 12
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.Asia-Pacific
Trends
Cross-border activity 2018 Transaction sizes
Main markets Junior markets
Asia-Pacific issuers’
2018 Change on prior year 2018 Change on prior year
cross-border activity
Percentage of all Asia-Pacific issuers Median post-
IPO market cap $138.3m 27% $40.3m 54%
Cross-border 24
8% 9%
$37.3m $9.9m
6%
5% 6% Median 20% 51%
deal size
3.4% of all Asia-Pacific issuers* listed IPOs $300 $100
abroad but within the Asia-Pacific region Trends
$80
2014 2015 2016 2017 2018
$200
Median post-IPO $60
market cap US$m
$40
Outbound
$100
41
Median deal size $20
US$m
$0 $0
Despite declines in
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
5.9% of all Asia-Pacific issuers* listed IPOs
most IPO markets outside Asia-Pacific
across the region Sources of IPOs
during 2018, Asia-
2018
Pacific exchanges
Inbound
Percentage
3.7% 2.3% 86% 93% 95.5% 95% 94%
of proceeds
10
represented six of the 5.8%
top ten exchanges Percentage
0.6%
7.8% of cross-border IPOs globally**
globally by volume in listed in Asia-Pacific but came from IPOs
of IPOs
2018, and five of the outside the region 93.6%
top ten by proceeds. 1%
1% 0.3% 0.3% 0%
94.0% 13% 6% 5% 6%
*There were 688 IPOs by Asia-Pacific issuers in YTD 2018. This analysis is based on the listed
4.2%
company domicile, regardless of the listed company exchange. 2014 2015 2016 2017 2018
** There were 130 cross-border IPOs globally in YTD 2018. Financial sponsor-backed Former state-owned enterprises Non-financial sponsor-backed
All amounts in table are in US$. Figures may not total 100% due to rounding.
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 13
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.Asia-Pacific
Performance
IPO pricing and performance 2018 Equity indices 2018 Volatility index
Share price
First-day Hang Seng Nikkei 225 ASX 200 Hang Seng Volatility
performance since
average return
IPO -8.9% -3.2% -5.8% 24.83 index level
Hong Kong Japan Australia +36.6%
+17.0% +9.1%
YTD
Main markets
Shanghai FTSE Straits Times KOSPI +10.2%
Composite -1.4% -14.3% Q4 2018
Junior markets +40.3% +97.2% -19.4% Singapore South Korea
Mainland China
+ indicates an increase in volatility as at 4 December 2018 compared
with 29 December 2017 for year-to-date (YTD) and 28 September
2018 for end of Q3 2018. Whereas - indicates a decrease in volatility
+ or – indicates change compared with offer price at IPO + or – indicates change since 29 December 2017 over the same time period.
Outlook
► As we head into 2019, the Asia-Pacific IPO markets have reached ► Mainland China continues to see lower levels of IPO activity as the substantial investor capital away from the IPO market, making it
crossroads. If there is a turnaround in economic fundamentals regulator continues to slow the pace of reviews and delay listing more difficult for small- to mid-size IPOs to achieve higher valuations
(greater geopolitical certainty, better trade relations and an increase approvals. However, the IPO pipeline remains strong. Although mega in Q1 2019.
in liquidity), we expect higher levels of IPO activity in 2019. IPOs with strong fundamentals may wait for the IPO window to ► In Australia, investors will continue to be selective in which larger
However, if the fundamentals remain as they are, we may see a reopen to avoid a huge IPO discount, we expect stable IPO activity in IPOs (by deal size) they support, restricting IPO volumes at the top
short burst of activity in Q1 2019, but may have to wait until the the region going into 2019. end of the market in 2019. IPO activity instead will focus on smaller-
second half of 2019 for a sustained improvement in IPO activity. ► In Hong Kong, despite ongoing geopolitical and trade issues, the IPO cap issuers, mining and metals and technology companies.
► Several sectors are expected to remain active. Technology and pipeline remains strong going into 2019. The number of companies ► Southeast Asia will remain relatively quiet in the first half of 2019.
media and entertainment issuers will continue to drive Asia-Pacific filing to go public in Hong Kong has jumped almost three-fold this If geopolitical and trade uncertainties stabilize globally, then this
IPO markets in 2019. At the other end of the spectrum, traditional year, driven in part by China’s burgeoning technology sector and region may see an uptick in IPO activity in the second half of 2019.
sectors such natural resources may be looking to increase their listing reforms designed to attract high-growth technology and During the second half of 2018, the Thai and Indonesian exchanges
IPO presence as persistent trade issues with the US make oil and gas biotechnology companies. However, there could be headwinds in the experienced higher IPO activity, while other emerging markets were
IPOs more attractive, and some investors are looking to go back to form of weaker secondary markets, which could impact IPO activity. marred by volatility in equity markets. We expect this trend to
the basics. In the short term, we expect investor appetite will trend ► The outlook for the Japan IPO market remains strong as we go into continue into 2019.
toward more traditional IPOs as investors look to limit their risk. 2019. However, the SoftBank Corp. IPO may have absorbed
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 14
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.Asia-Pacific — Greater China market insight
Early preparation remains key to
capturing the IPO window in 2019
“Despite the geopolitical issues, which created market volatility
during Q4 2018, Greater China exchanges posted a modest
increase in IPO proceeds in 2018 compared with 2017. New
listing rules on weighted voting rights and pre-revenue biotech
companies have attracted high-profile technology and biotech
companies to list in Hong Kong. In Mainland China, a new science
and technology innovation board will fast-track the listing of
quality high-tech and advanced manufacturing companies. With
volatility set to continue in 2019, successful issuers will be those
that are well-prepared and ready to capture the IPO window when
it opens.”
Terence Ho
EY Greater China IPO Leader
Global IPO trends: Q4 2018 | Page 15Asia-Pacific — Greater China market insight
Highlights from the markets Markets Activity Q4 2018
► As a whole, the Greater China IPO market remains a bright
spot in the global IPO market. Hong Kong markets saw higher 2018
Change on
Q4 2018
Change on
prior year
Hong Kong Main Market
prior year
deal numbers and proceeds. Meanwhile, Mainland China saw a quarter
slow down in IPO activity during 2018 compared with 2017. Sectors IPOs
► The Hong Kong Main Market and Growth Enterprise Market 307 49% 62 56% by highest number of IPOs largest by proceeds
(GEM) was the most active stock exchange globally by both IPOs IPOs
Fosun Tourism Group
deal number and proceeds in 2018 (197 IPOs, US$35.4b). Real estate
► Hong Kong markets saw a rise of 24% and 120% by volume $56.7b 13% $7.7 42% 7 IPOs | $812m
$486m
Media and entertainment
and proceeds, respectively, in 2018 compared with 2017. proceeds proceeds
Innovent Biologics Inc.
New listing rules for new economy companies that became All amounts in table are in US$
Materials
effective in April 2018, as well as a couple of mega and unicorn
6 IPOs | $691m $485m
IPOs, were largely responsible for higher activity levels. But Health care
investor sentiment began to waver in Q4 2018 as the average Hong Kong Main Market Shanghai and Shenzhen Xinyi Energy Holdings Ltd.
oversubscription rates levelled off at 80% compared with 100% Industrials
in the first half of 2018. Q4 2018
Change on
Q4 2017 Q4 2018
Change on
Q4 2017
5 IPOs | $187m $450m
Energy
► Hong Kong equity market appears to have underestimated both
the consequences and duration of the geopolitical uncertainty.
34 7% 18 80%
This change in market expectations may have a negative IPOs IPOs Shanghai and Shenzhen
impact on IPOs coming to the market in the next few
months as well as those in the pipeline. $4.4b 23% $3.2b 63% Sectors IPOs
proceeds proceeds by highest number of IPOs largest by proceeds
► In Mainland China, a sluggish stock market, pessimistic
market sentiment and increasing trade tensions took their People's Insurance Company (Group)
toll on the equity and IPO markets. Shanghai and Shenzhen
140 $35 450
400
$40
Industrials of China Ltd.
$872m
120 $30 $35
Exchanges posted 105 IPOs with proceeds of US$21.2b in
100 $25
350 $30 7 IPOs | $581m
2018, a decline of 76% by volume and 38% by proceeds 300
$25
Financials, Shanghai
80 $20
compared with 2017. 250
$20 Shenzhen Mindray Bio-Medical
► Given the poor post-IPO performance of some recent IPOs, it
60 $15 200
$15 Financials Electronics Co. Ltd.
$864m
150
4 IPOs | $1,459m
40 $10
$10
may be some time before a rebound in IPO valuations. At the 100
20 $5
50 $5 Health care, Shenzhen-Chinext
same time, the pipeline of IPO candidates and investor 0 $0 0 $0
sentiment for A-share IPOs remain strong, with almost all China Great Wall Securities Co. Ltd.
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Health care
companies achieving the maximum first-day returns of 44%. $286m
► By proceeds, technology, telecommunications and financials
Number of IPOs Proceeds US$b
3 IPOs | $985m Financials, Shenzhen
were the most active sectors in Greater China. By volume, Shenzhen includes both listings on the Mainboard, Small and Medium Enterprise board and ChiNext
All amounts in table are in US$ All amounts in table are in US$
industrials dominated, followed by technology and consumer
products.
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 16
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.Asia-Pacific — Greater China market insight
Trends
Cross-border activity 2018 Transaction sizes
Hong Kong Main Market Shanghai and Shenzhen
Greater China issuers’ To which destination? 2018 2018 Change on prior year 2018 Change on prior year
cross-border activity
Percentage of all China issuers 35 IPOs to US exchanges Median post-
IPO market cap $127.9m 14% $467.5m 110%
1 IPO to South Korea’s KOSDAQ
11%
Median
$32.1m $90.4m
10%
18% 70%
6% 5%
deal size
4%
Trends $500 $500
$400 $400
2014 2015 2016 2017 2018
Median post-IPO
2018 market cap US$m
$300 $300
$200 $200
Although Hong Kong Leaving Greater China Median deal size $100 $100
36
US$m
Outbound
$0 $0
saw a slowdown in both 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
deal number and funds IPOs
raised in Q4 2018 11.3% of Greater China issuers* listed abroad
Sources of IPOs
compared with Q3
2018, which was 2018
Coming to Greater China 2%
Percentage 90% 94% 99.1% 99% 99.6%
impacted by lagged of proceeds
market reflection on
China-US trade dispute, Inbound 21 Percentage
of IPOs
0.3%
16.4% of cross-border IPOs globally** IPOs
it ranks first in terms of
were listed on HKEx and GEM 99.4 1%
both deal number and 97% %
9%
1%
0.3%
5%
funds raised in 2018. *There were 314 IPOs by Greater China issuers in YTD 2018. This analysis is based on the 2014 2015
0.6%
2016
0.7%
2017
0.3%
2018
listed company domicile, regardless of the listed company exchange.
** There were 130 cross-border IPOs globally in YTD 2018. Financial sponsor-backed Former state-owned enterprises Non-financial sponsor-backed
All amounts in table are in US$. Figures may not total 100% due to rounding.
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 17
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.Asia-Pacific — Greater China market insight
Performance IPO pipeline
IPO pricing and performance 2018 Equity indices 2018 Mainland China More than More than
270 227
Share price Shanghai Composite Shenzhen Composite Shenzhen SME
First-day
performance
average return
since IPO -19.4% -27.0% -33.7%
Hong companies are companies
Kong Main
Market
+1.2% -12.6% Equity indices 2018 Hong Kong Volatility index in the China have
Hang Seng Hang Seng Hang Seng Hang Seng Volatility Securities submitted
Shanghai
and
Shenzhen
+44.0% +61.5% -8.9% China China Affiliated 20.0 index level Regulatory
Commission
public filings
with HKEx.
Enterprises Corporations +36.6% YTD
-6.9% -0.4% +10.2% Q3 2018 (CSRC) pipeline.
+ indicates an increase in volatility as at 4 December 2018 compared with 29 December 2017 for year-to-
+ or – indicates change compared with offer price at IPO + or – indicates change since 29 December 2017 date (YTD) and 28 September 2018 for end of Q3 2018. Whereas - indicates a decrease in volatility.
Outlook
► The extent and duration of the geopolitical uncertainty and trade under a new registration system. This should speed up IPO ► In Hong Kong, we expect quality IPO candidates will continue to find
tensions will create headwinds for IPO activity in 2019. That said, approvals and improve the pace of IPO activity for 2019 and beyond, the right windows to issue IPOs even as investors deal with stricter
more unicorn companies in the technology, education, consumer particularly for advanced manufacturing and high-tech issuers. requirements on a company’s quality and valuation. Overall, HKEx
products and health care sectors are expected to come to the public ► China has also modified regulations around the lockup period for IPO regulatory reforms will continue to play a positive role in attracting IPO
capital markets in 2019. rejected companies to improve the quality of listed companies, and candidates. As we look ahead, companies remain optimistic in their
► In Mainland China, the regulator China Securities Regulatory tightened rules for delisting as a precursor to the implementation of desire to go public, with more than 225 companies having issued
Commission (CSRC) continues to control IPO approvals. As such, IPO the IPO registration system. application proofs. We anticipate that telecommunications, media and
reviews will continue to be strict. However, we anticipate that IPO entertainment, technology and consumer products to be the most active
► In addition, in December 2018, China and the UK will likely
activity will be more active in 2019 compared with 2018, sectors on the Hong Kong market.
announce the new Stock Connect program between Shanghai and
particularly as the CSRC pipeline continues to decline. London that will see companies from the UK and Mainland China ► However, Hong Kong investors will want to be cautious of new
► In November, the Mainland China Government announced its decision listing and trading on each other’s exchanges. share listings. Geopolitical uncertainty, trade issues and a likely
to launch the science and technology innovation board at the increase in interest rates could impact the capital markets, and, by
Shanghai Stock Exchange in 2019. This new board will operate extension, investor sentiment for IPOs.
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 18
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.Asia-Pacific — Japan market insight
Steady growth and blockbuster IPOs
set Japan on a strong course for 2019
“Japan saw a variety of IPOs came to the public markets in 2018,
from a giant telecommunications company, to two unicorn
startups and numerous technology and consumer product
companies. As the country’s IPO market steadily grows, and the
flow of foreign investments into Japan’s markets continues to
rise, we expect a new and interesting mix of IPOs to emerge in
2019.”
Shinichiro Suzuki
EY Japan IPO Leader
Global IPO trends: Q4 2018 | Page 19Asia-Pacific — Japan market insight
Highlights from the market Markets Activity Q4 2018
► Japan ends 2018 on a high note with 31 IPOs in Q4 2018 Change on
Change on
2018 Q4 2018 prior year
with total proceeds of US$21.6b. Overall, Japan posted 97 prior year
quarter Sectors IPOs Tokyo Main
IPOs in 2018, a modest 2% increase in terms of volume, but Market
representing a massive 333% increase over 2017 proceeds. 97 2% 31 16%
by highest
number of IPOs
largest by
proceeds IPO pricing and
This can be attributed to the listing of telecommunications IPOs IPOs performance
giant SoftBank Corp. (a subsidiary of SoftBank Group Corp.
(SBG)) on the Tokyo Stock Exchange in the second half of $26.4b 333% $21.6b 698%
December, with expected proceeds of US$21.1b to Proceeds proceeds
US$23.5b, making it Japan’s largest IPOs ever.
► Strong Abenomics reform policies, combined with Japan’s $10.3m 15% $7.1m 40% Technology SoftBank First-day
hosting of the Rugby World Cup in 2019 and the Olympics in median deal size median deal size 11 IPOs Corp. average return
2020 are contributing to Japan’s strong economy. Meanwhile, $61m $21.1b
the performance and profitable growth of the country’s larger Tokyo Main Market JASDAQ and MOTHERS
+1.6%
Telecoms
companies have exceeded 2017 levels in 2018. Japan’s Change on Change on Tokyo (TSE)
Q4 2018 prior year Q4 2018 prior year
favorable relationship with China has allowed Japan to sidestep quarter quarter
the trade tensions that have impacted economies in other parts
of the world. These positive economic and financial factors 4 64% 27 17%
Share price
are feeding investor confidence and maintaining their IPOs IPOs Consumer ARTERIA performance
products Networks since IPO
appetite to invest in major companies, startups and IPOs.
In 2018, technology was the primary driver of IPOs as Japan
$21.3b 808% $0.3b 14% 5 IPOs Corp.
-12.5%
►
entered the unicorn era, with Mercari, Inc. and MTG Co. Ltd. proceeds proceeds
$42m $204m
leading the way. However, the biggest story of the year, was the
mega IPO by telecommunications company SoftBank Corp.
$101.5m 5% $6.7m 39%
Telecoms
Tokyo (TSE) + or – indicates change
median deal size median deal size compared with offer price
at IPO
► Following Prime Minister Abe’s recent re-election, he is expected 30 $26 90 $3.0
to lead Japan until 2021. This ongoing political stability $2.8
Industrials Autonomous
$22 80 $2.6
25
create favorable conditions for Japan’s economy and IPO 70 $2.4
$2.2 Equity
Control
$18
markets.
20
$14
60 $2.0
$1.8 3 IPOs index
Systems
50
$87m
15 $1.6
► Looking ahead to 2019, we expect Japan to launch around 90 $10 40 $1.4
$1.2
to 100 IPOs next year, similar to 2018 deal volume. However, Laboratory
Nikkei 225
10 30 $1.0
$6 $0.8
Ltd.
20
the SoftBank Corp. IPO may absorb substantial amount of 5
$0.6
-3.2%
$2 $0.4
10
investors’ funds from the IPO market. We expect more small- to $73m
$0.2
0 -$2 0 $0.0
mid-size IPOs to come in Q1 2019, but these issuers may face 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Japan
Industrials
lower IPO valuations. The good news, however, is that the ratio Number of IPOs Proceeds US$b MOTHERS
of overseas investors continues to rise, bringing new All amounts in table are in US$ All amounts in table are in US$. + or – indicates change since 29 December 2017
investment funds into the Japan IPO markets.
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 20
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.Europe, Middle East, India and Africa
EMEIA IPO markets buoyed by strong
fundamentals and investor confidence
“The EMEIA IPO market continues to be buffeted by waves of
uncertainty owing to geopolitical tensions, trade issues between
the US, EU and China, and the looming exit of the UK from the
EU. However, the region increased its global market share and
hosted two of the five largest IPOs globally during 2018. While
the flow of IPO activity may remain slower than usual in Q1
2019, with strong economic fundamentals and the backing of
investors, we expect EMEIA IPO markets will remain a dominant
force globally in 2019. We expect to see IPOs from a diversified
group of IPO bound companies from unicorns, family businesses,
carve-outs and high growth businesses.”
Dr. Martin Steinbach
EY Global and EY EMEIA IPO Leader
Global IPO trends: Q4 2018 | Page 21Europe, Middle East, India and Africa
Highlights from the markets Markets Activity Q4 2018
► Geopolitical tensions had a clear impact on EMEIA IPO activity in Change on
Change on
2018 Q4 2018 prior year
2018, as deal volume dropped 16% compared with 2017. An prior year
quarter Stock Sectors IPOs
unclear path to Brexit, political changes in Germany and exchanges
Italy, and US trade and tariff uncertainties all had a direct 432 16% 79 47% By highest
by highest
number of IPOs
largest by
proceeds
impact on EMEIA economies and IPO activity. IPOs IPOs proceeds
► Despite these challenges, EMEIA exchanges remained strong
as the world’s second-largest IPO market. EMEIA accounted $47.7b 26% $12.0b 43%
for 32% of global volume and 23% by proceeds in 2018. EMEIA proceeds proceeds
All amounts in table are in US$
accounted for three of the top ten exchanges by proceeds
(Germany, UK and India) and one by volume (India). Deutsche Technology Knorr-
► In Europe, Northern EU economies remain stable and interest Börse 16 IPOs Bremse AG
rates remain low. However, geopolitical issues and trade Main markets Junior markets (Main+Scale) $485m $4.4b
tensions continue to mute investor confidence. 2018 IPO deal
Q4 2018
Change on
prior year Q4 2018
Change on
prior year
$4.6b Germany
volumes fell by 16% and proceeds fell by 17%, versus 2017. quarter quarter 3 IPOs Industrials
Deutsche Börse
► UK markets remain active, despite the Brexit turmoil. The
London Main Market and AIM ranked seventh place within the 39 37% 40 54%
Germany
top ten exchanges globally by proceeds in 2018. UK IPOs raised IPOs IPOs
London Industrials Aston Martin
►
US$8.5b from 51 IPOs.
In India, a liquidity crisis among non-bank lenders caused a
$11.6b 41%
$0.3b 76%
(Main and 14 IPOs Lagonda Global
proceeds proceeds
correction in the Indian stock market in Q4 2018. At the same AIM) $6,792m Holdings plc
time, foreign investors continue to be net sellers of equity, which $2.7b $1.4b
has triggered in a drop in the Indian rupee. In 2018, Indian 250 $80 350 $7.0
13 IPOs UK
exchanges saw 161 IPOs, raising US$5.5b in capital. 300 $6.0 UK Industrials
200
► In the Middle East and North Africa (MENA), volatility in oil $60 London (LSE)
250 $5.0
prices, coupled with geopolitical tensions in the region and 150
volatility in global equity markets have caused investors in $40
200 $4.0
Euronext & Consumer Neoen SA
MENA IPO markets to press pause. As a result, IPO candidates 100 150 $3.0
Alternext products $807m
have put their transactions on hold until favorable conditions $1.5b
return in the region. 50
$20
100 $2.0
12 IPOs France
Energy
50 $1.0
5 IPOs $617m Euronext (Paris)
► Technology and industrials posted the highest deal numbers 0 $0 0 $0.0 Netherlands,
in EMEIA in Q4 2018, while industrials overwhelmingly drove 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Belgium, Paris,
proceeds. For 2018, technology, industrials and consumer Lisbon
Number of IPOs Proceeds US$b
products sectors saw the highest number of IPOs.
All amounts in table are in US$
► Cross-border activity of EMEIA issuers rose during 2018 All amounts in table are in US$
(9.6% of IPOs), moving toward the historical average of 10%.
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 22
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.Europe, Middle East, India and Africa
Trends
Cross-border activity 2018 Transaction sizes 2018
Main markets Junior markets
EMEIA issuers’ 2018 2018 Change on prior year 2018 Change on prior year
cross-border activity
Percentage of all EMEIA issuers Median post-
IPO market cap $255.6m 2% $11.3m 15%
Cross-border 43
16%
12%
8% 8%
10%
Median
deal size $83.2m 12% $2.9m 13%
9.6% of all EMEIA issuers* listed abroad IPOs $300
Trends $40
$30
2014 2015 2016 2017 2018 Median post-IPO $200
market cap US$m $20
$100
Outbound 21
Median deal size $10
US$m
IPOs that launched in $0
2014 2015 2016 2017 2018
$0
2014 2015 2016 2017 2018
2018 posted first-day 4.7% of all EMEIA issuers* listed outside EMEIA IPOs
returns of nearly 10% Sources of IPOs
and have outperformed Percentage
Inbound
2018
most main market of proceeds 78% 80% 83% 89% 90%
7
21%
indices in 2018, 7%
3%
5.4% of cross-border IPOs globally** listed Percentage
solidifying investor on EMEIA exchanges but came from of IPOs 8%
IPOs
confidence in the outside the region 71% 90%
1% 1%
2% 1%
EMEIA IPO market. 21% 19% 15%
3%
10% 7%
*There were 446 IPOs by EMEIA issuers in YTD 2018. This analysis is based on the listed 2014 2015 2016 2017 2018
company domicile, regardless of the listed company exchange.
** There were 130 cross-border IPOs globally in YTD 2018. Financial sponsor-backed Former state-owned enterprises Non-financial sponsor-backed
All amounts in table are in US$. Figures may not total 100% due to rounding.
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 23
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.Europe, Middle East, India and Africa
Performance
IPO pricing and performance 2018 Equity indices 2018 Volatility indices
First-day
Share price BSE CAC 40 DAX 30 Euro VSTOXX® VDAX® VFTSE 100
performance
average return
since IPO
SENSEX -5.6% -12.3% STOXX 50 17.20 18.36 16.83
+6.1% France Germany -9.2% index level index level index level
India Europe +27.4% +29.7% +76.3%
Main
markets +9.6% +9.0% YTD
+16.6%
YTD
+21.0%
YTD
+43.3%
FTSE 100 JSE All Share MICEX Tadawul
Q3 2018 Q3 2018 Q3 2018
-8.7% -12.2% +15.8% All Share
Junior
markets +7.6% -2.2% UK South Africa Russian Federation +6.4%
Saudi Arabia
-+ indicates a increase in volatility as at 4 December 2018 compared with 29 December
2017 for year-to-date (YTD) and 28 September 2018 for end of Q3 2018. Whereas -
+ or – indicates change compared with offer price at IPO + or – indicates change since 29 December 2017 indicates an decrease in volatility over the same time period.
Outlook
► Looking ahead to 2019, a number of uncertainties prevail, ► In the UK, Brexit will likely find resolution in Q1 2019. In Q1 2019, ► Across MENA, while pipelines remain robust, companies may
including the US-China-EU trade tensions, Brexit and uncertainty with we anticipate that foreign IPO candidates will dominate IPO activity continue to put their IPO plans on hold, at least in Q1 2019, in
respect to the stability of selected European country economies. At as domestic companies delay their IPO plans and wait to see how response to fluctuating oil prices and geopolitical uncertainty.
the same time, with interest rates expected to rise in the US, it’s only markets react post-Brexit. In the second half of 2019, the UK IPO However, there are positive opportunities ahead for MENA IPO
a matter of time before the European Central Bank feels the pressure markets are expected to kick back into gear as domestic IPO markets: the Abu Dhabi Securities Exchange plans to roll out futures
to follow suit. These issues will likely continue to influence IPO candidates look to launch when the timing is right. trading in 2019 to boost investments; the Morgan Stanley Capital
activity in the quarters to come. However, with strong economic ► In India, the results of a series of upcoming state elections may International (MSCI) may reclassify the Kuwait Stock Exchange as an
fundamentals and investor confidence, EMEIA IPO markets are impact macroeconomic stability in 2019. If the results are favorable, emerging market; and the Egyptian Government looks to list state-
expected to remain a dominant force globally in 2019. we expect Indian stock markets to rally and provide momentum to owned enterprises on its stock exchange.
► In Europe, all eyes will be on the four largest economies (France, IPO activity, at least in Q1 2019. Overall, we expect IPO candidates ► Given the ongoing political and economic instability in many key
Germany, Italy and the UK). If one falters, it could challenge capital and to take a “wait and watch” approach, until the stock market African markets, we continue to anticipate that African IPO activity
IPO markets. Meanwhile, Brexit will be an issue until the UK and EU correction, low rupee exchange rate, and other domestic and will remain slow for the first half of 2019.
Governments finalize a plan no later than Q1 2019. European IPO geopolitical uncertainties reach resolution.
deal activity could remain sluggish until the second half of 2019.
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 24
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.Europe snapshot
Markets Activity Q4 2018 Trends 2018
Change on Transaction sizes
2018
Change on
prior year Q4 2018 prior year Sectors
quarter
by highest number of IPOs Main markets Change on prior year Junior markets Change on prior year
228 16% 61 35% Technology Median post-IPO market cap $240.2m 16% $28.8m 8%
IPOs IPOs 15 IPOs | $484m
Median deal size $89.0m 45% $6.8m 11%
$38.6b 17% $10.6b 14% Health care
11 IPOs | $252m
Proceeds proceeds *There were 234 IPOs by European issuers in 2018. This analysis is based on the
10% of IPOs are 5% of IPOs are Industrials
Cross-border IPOs: top IPO issuers listed company domicile, regardless of the listed company exchange.
** There were 130 cross-border IPOs globally in 2018.
financial sponsor- financial sponsor- 9 IPOs | $6,704m
backed backed
Cross-border Outbound Inbound
All amounts in table are in US$ IPOs 15% of all Europe
issuers* listed
35 7.3% of all Europe
issuers* listed
17 7.7% of cross-border IPOs globally**
listed on European exchanges but
10
largest by proceeds abroad IPOs outside Europe IPOs came from outside Europe IPOs
Main markets Junior markets
Change on Change on Knorr-Bremse AG
Q4 2018 prior year
quarter
Q4 2018 prior year
quarter
$4.4b Industrials, Deutsche Börse
Performance 2018
Aston Martin Lagonda Global
29 26% 32 42% Holdings plc $1.4b Industrials,
IPOs IPOs London (LSE)
$10.1b 7% $0.3b 73%
Neoen SA $807m Energy,
Euronext (Paris)
Equity indices Volatility index IPO pricing and
performance
proceeds proceeds
160 $6
Stock exchanges CAC 40 DAX 30 VSTOXX®
180 $70
by highest total proceeds -5.6% -12.3% First-day average return
160
$60
140
$5 France Germany +27.4% | 17.2 index level
140
$50
120 Deutsche Börse (Main and YTD Main markets +9.5%
120 100
$4
Scale)
100 $40 80 $3 $4.6b | 3 IPOs Germany Junior markets +10.3%
80 $30 60
60
40
$2
London (Main and AIM) Euro STOXX 50 FTSE 100 VFTSE 100 Share price performance since IPO
$20
-9.2% -8.7%
+76.3% | 16.8 index level +12.2%
40
$10
20
$1
$2.7b | 13 IPOs UK Main markets
20 Europe UK
0 $0
0 $0 YTD
2014 2015 2016 2017 2018
2014 2015 2016 2017 2018 Euronext and Alternext Junior markets -0.5%
Number of IPOs Proceeds US$b $1.5b | 5 IPOs France, Belgium, + indicates a increase in volatility as at
Portugal 4 December 2018 compared with + or – indicates change compared with offer
All amounts in table are in US$ All amounts in table are in US$ + or – indicates change since 29 December 2017 29 December 2017 for year-to-date (YTD). price at IPO
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 25
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.EMEIA — UK IPO market insight
Brexit uncertainty gives IPO candidates
more time to prepare for 2019
“Despite the uncertainty that Brexit has created, London
exchanges continue to rank among the top 10 exchanges globally
by proceeds. Moreover, we’ve seen some significant companies
successfully complete their IPOs, proving that IPOs remain a
viable option. Without a firm Brexit plan, we expect a slow start
to H1 2019. However, once we have clarity, we believe the IPO
window will reopen rapidly, so IPO candidates should now take the
time to prepare in order to be ready to launch and take advantage
of pent-up investor demand.”
Scott McCubbin
EY UK and Ireland IPO Leader
Global IPO trends: Q4 2018 | Page 26EMEIA — UK IPO market insight
Highlights from the markets Markets Activity Q4 2018
► The Brexit story continues to play out as 2018 draws to a Change on
Change on
close. As of 7 December 2018, a Brexit plan has yet to be 2018 prior year Q4 2018 prior year
quarter
Sectors IPOs on IPOs on AIM
finalized. As a result, it is difficult to predict the 2019 UK IPO by highest Main Market largest by
market with any certainty. As it has in previous quarters, the
shadow of Brexit continues to create uncertainty.
51 35% 13 48% number of IPOs largest by proceeds
IPOs IPOs proceeds
Year-on-year, 2018 UK IPO deal volumes declined 35%, while
$8.5b $2.7b
►
proceeds fell by 43% compared with 2017. Lower deal volumes 43% 43%
and proceeds largely reflect investor hesitation to back IPOs proceeds proceeds
in a volatile and uncertain market. All amounts in table are in US$
Materials Aston Martin Manolete
► Nevertheless, London Main Market and AIM remain a key Partners plc
listing destination, ranking seventh within the top ten 3 IPOs Lagonda
exchanges globally by proceeds during 2018. London Main Market London AIM $437m Global $38m
Consumer products
► Despite the slowdown in transactions because of Brexit, the Q4 Q4 2018 Change on
Q4 2018 Change on Holdings plc UK
2018 deals that have moved forward have been sizeable. The
Q4 2017 Q4 2017
$1.4b
Aston Martin Lagonda Global Holdings plc listing in October
ranked as the fourth biggest IPO globally in Q4 2018, posting
8 20% 5 67%
Industrials
UK
IPOs IPOs
US$1.4b in proceeds. Kropz plc
Technology National
► Due to the Aston Martin deal, industrials led UK IPO activity by
proceeds in Q4 2018. By deal number, materials and technology
$2.6b 37% $119m 82% 3 IPOs Atomic $35m
Materials
each saw three IPOs, while consumer products and financials saw
proceeds proceeds $235m Company South Africa
two IPO each. Kazatomprom
► Cross-border activity in the UK market in Q4 2018 included 45 $25 80 $8
JSC
companies from Kazakhstan, Cuba and South Africa with one IPO 40 70 $401m
each. In 2018 as a whole, UK exchanges hosted 14 inbound deals 35 $20
60 $6 Materials
with proceeds totalling US$3.1b, accounting for 27% of UK IPOs 30
50
Kazakhstan
$15
and 37% by total proceeds. 25
Consumer Renalytix AI
20
40 $4
Global
Although 2018 deal volumes and proceeds saw a decline from
$10 30
products plc
► 15
Sustainability
2017 levels, the UK IPO pipeline remains robust. A pause in 20 $2
2 IPOs $32m
Trust plc
10 $5
the UK IPO market is giving IPO candidates additional time to 5 10
Health care
prepare so that they are well-positioned to take advantage of the 0 $0 0 $0 $288m $262m UK
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Financials
reopening of the UK IPO window later in 2019.
UK
Number of IPOs Proceeds US$b
All amounts in table are in US$ All amounts in table are in US$
All values are US$ unless otherwise noted. | Q4 2018 and Q4 18 refer to the fourth quarter of 2018 and cover priced IPOs from 1 October to 5 December 2018 plus expected IPOs by end of December. YTD 2018 and 2018 refer to the full year of 2018 and cover Global IPO trends: Q4 2018 | Page 27
priced IPOs from 1 January to 5 December 2018 plus expected IPOs by end of December.You can also read
