2018 should be bumper year for IPOs, EY report insists

Investors should expect increased growth in IPOs in 2018 after the market returns to pre-crisis level highs in 2017.

The latest IPO report by EY shows that by deal number, 2017 is the most active year for global IPOs since 2007.

IPO activity in all regions so far is up double digits with Asia-Pacific dominating global activity.

The report added that IPO activity levels were expected to rise further in 2018 with a busy year ahead and mega deals on the horizon.

Commenting on the report’s findings Dr. Martin Steinbach, EY Global and EY EMEIA IPO Leader, said: "2017 will close with more IPOs than any year since 2007. With this great momentum, IPO candidates are lining up for 2018. 

Healthy global pipeline

“The outlook appears bright, driven by lower volatility across regions, high valuation levels and a renewed appetite for cross-border IPOs, particularly in the US, Hong Kong and London.”.

He added: “A healthy global pipeline across a broad range of sectors and markets suggests IPO activity levels will be up with more megadeals, thereby increasing the global proceeds in 2018."

Emerging markets contributed strongly to overall IPO performance, with India's Bombay and National exchanges recording a 74% increase in deal numbers in 2017. The Middle East saw a 256% increase in proceeds and a 179% increase in deal numbers over 2016, with Saudi Arabia continuing to lead the way.

There were 174 IPOs in the US in 2017, raising $39.5bn, a welcome increase of 84% in terms of proceeds and 55% by volume compared with 2016.

This meant that the Americas accounted for 13% of global deals and 27% of global IPO proceeds in 2017. 

Cross-border IPOs

In 2017, the proportion of cross-border IPOs was the highest since 2010, accounting for 24% of US IPOs by number of deals and 25% by proceeds.

Cross-border deals look set to remain a feature of the global IPO market in 2018, especially with exchanges in US, Greater China and London.

This trend will help to support next year's anticipated listing of the world's largest oil company with more state-owned enterprise IPOs expected to follow across the Middle East and North Africa.

As the year comes to a close, a healthy pipeline of market-ready companies is growing as a result of lower volatility across regions, equity indices still hitting all-time highs and increasing investor confidence, the report said.