EY: Capital Markets Quarterly Q1 2016

Global IPO volume down in first quarter as issuers wait for market conditions to improve” – this is the headline of our international and German press release on primary markets for Q1 2016, which was published recently. Hier geht es zur Pressemitteilung.

Global IPO activity down 39% by volume and 70% by value on same period of 2015 – the weakest first quarter since 2009

Asia-Pacific remains the world’s busiest region (102 deals, US$6.6b)
Europe contributed six of the 10 largest IPOs (51 deals, US$4,7b)
US with only 10 IPOs

Global IPO activity slowed significantly with a total of 167 deals raising just US$12.1b. EMEIA region saw 51 IPOs, raising a total of US$4.7b in proceeds, a decline of 43% by deal volume and 76% by proceeds compared to 1Q15. However EMEIA was the second strongest region behind Asia Pac. London was the strongest destination. The sectors: tech, healthcare and energy accounted for almost half of the IPOs. Germany contributed with two IPOs: BRAIN and Senvion.

Volatility leads to multi-tracking and a “wait and see” approach

A cocktail of global volatility factors at the beginning of the year with fears of a global economic slowdown, falling oil prices and geopolitical uncertainties have all contributed to the slower than usual start to the year. To some extent, the decline in activity can be attributed to a “cooling off” effect after several years of strong IPO activity across major markets. In the current climate, both IPO-ready companies and potential investors are in effect sheltering from volatile, gloomy weather and waiting for the outlook to improve. This explains why there have been more postponed IPOs, why deal sizes have fallen and why financial sponsors are biding their time for the exit environment to improve, which is always a sure sign that these sponsors think better times are ahead.

Outlook – the year will improve

As the markets recover and confidence steadies, we are optimistic that IPO levels will start to trend closer to historic norms. There are reasons to expect that the forthcoming quarters will show an improvement in activity. From an economic perspective, the US Federal Reserve is expected to moderate its interest rate hikes, while the ECB provided additional stimulus in early March. China has eased monetary policy with a further cut in reserve requirement ratios, too and is likely to react to lower growth expectations with further supportive measures. The future path of oil prices is hard to predict, but recent signs of stability, albeit at lower levels, should bolster investor sentiment. Domestic fundamentals in the Eurozone remain encouraging backed up by continued monetary easing.

Hier geht es zur Studie von Ernst & Young.