Ernst&Young: Global IPO activity hit as volatility spikes and China pauses

“Global IPO activity hit as volatility spikes and China pauses” – this is the headline of our international and German press release on primary markets for Q3 2015, which was published recently. 

• Record-breaking run in Mainland China ends as listings are suspended
• European markets set to pick up the pace but unlikely to make up the global shortfall on 2014 levels
• German market: IPOs raised 1,6 bn Euro with strong IPO pipeline for Q4

2015 continues to be a stop-start year for global IPOs. There was a marked change in global IPO activity and investor sentiment during the third quarter of this year. After a stellar second quarter, particularly in China, which had its busiest quarter on record, IPO activity in emerging markets slowed, triggered by the sharp market correction and suspension of new listings in China. The total number of global IPOs (192) and the proceeds raised (US$ 17.9b) in Q3 2015 were down on the previous quarter by 55% and 75%, respectively. While the first nine months in 2015 had marginally more listings than the first nine months in 2014 (up 2%), global IPO proceeds are now down 32% on the same period last year. Financial sponsors “wait and see” as volatility increased.

IPO activity in EMEIA in the third quarter was muted, with steadily improving economic fundamentals offset by increased volatility and the fallout from global stock market fluctuations. A total of 54 deals raised US$3.8b in Q3 2015. placing EMEIA exchanges second by deal number after Asia-Pacific. For the nine months up to September, EMEIA exchanges saw 266 IPOs, raising US$41.8b, down 9% by deal number and 29% by capital raised respectively on the same time period in 2014.

Germany was the strongest market in Europe, providing beside the IPO of elumeo with Deutsche Pfandbriefbank and ADO Properties (1.156 and. 415 mio. Euro) the second and 10th largest IPO globally. The three IPOs in Q3 2015 combined a total issuing volume of 1,6 bn Euro.

Outlook: With European markets supported by low interest rates and the ECB’s quantitative easing program, confidence is rising, evidenced by the low gold price and positive IPO first day returns and after IPO performances year-to-date. With the Eurozone economy staging a slow-but-steady economic recovery, IPO prospects for Q4 2015 are positive. We still expect up to 15 IPOs in the Primary Markets in Germany for 2015.

Martin Steinbach, 
Head of IPO and Listing Services

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