Smeck Capital Management Services
Initial Public Offerings
An initial public offering or IPO is when a privately-held company makes its shares available for trading on public markets, such as the New York Stock Exchange (NYSE) or Nasdaq.
Going public is a way for a company to raise capital, and can offer opportunities for secondary offerings of shares in the future. An IPO can also be an opportunity for venture capitalists and other early investors to cash out and take profits.
When the IPO window of opportunity opens, winning companies are ready. While not all businesses are suited to life in the public eye, for many fast-growing private companies, an IPO can raise the capital needed to accelerate growth and achieve market leadership.
An IPO is the beginning of a new and dynamic journey for many successful companies; it is also a long and complex process involving a multitude of advisors, and the time commitment required from senior management cannot be underestimated.
At smeck Financial Services, we understand these pressures. We also know what a successful IPO looks like. Our research has confirmed that the most successful IPOs, with a smooth transaction and thriving aftermarket, are the best prepared.
Key highlights include:
- 77 IPOs listing in London raised £13bn in 2018.
- The Main Market saw 32 listings while AIM saw 45 admissions.
- IPO activity in 2019 is expected to pick-up considerably in Q2, as the low value of the pound continues to make UK investments attractive to international investors.
IPO market increased growth in 2019
- By deal number, 2017 is the most active year for global IPOs since 2007.
- IPO activity in all regions up double digits; Asia-Pacific dominates global activity.
- 2019 outlook: IPO activity levels expected to rise with a busy year ahead and mega deals on the horizon.
Global IPO activity surged in 2018, making it the most active year since 2007. Year-to-date, 2017 has registered 1,624 IPOs with US$188.8b raised – an increase of 49% by number of deals and 40% by capital raised compared with 2017. But while these figures do not equal 2007 levels (1,974 IPOs, which raised US$338.4b), investors are anticipating a very active 2019 as markets return to their pre-crisis levels.
Asia-Pacific IPO market overview
Asia-Pacific exchanges saw a surge of 44% by deal numbers to 935 IPOs in 2018 after an exceptionally strong first half of the year. However, the pace of listings slowed in Q4 2017, which saw only 240 deals – a 4% drop on Q4 2016. Proceeds in 2018, at US$73.2b, were only 0.2% higher than in 2017, reflecting the marked downward shift in average deal sizes. Exchanges based in Asia-Pacific took the top three rankings globally by deal number in 2018. Greater China exchanges saw 582 new listings in 2018 – a 68% increase on 2017.
EMEIA IPO market overview
EMEIA saw 469 deals raise US$64.0b in 2018, making the region second only to Asia-Pacific in terms of deal numbers and proceeds. Deal numbers increased by 50% in 2018 compared with 2017, while proceeds rose by 67%. Seventeen mega deals (with proceeds above US$1b) have raised US$28.7b, increasing the average deal size on the main markets by 45% to US$102.0m in 2018. Reflecting the global trend, cross-border activity by proceeds saw a huge increase, accounting for 14% of IPOs in 2018 compared with 2% in 2017.
Emerging markets contributed strongly to overall IPO performance, with India's Bombay and National exchanges recording a 74% increase in deal numbers in 2018. The Middle East saw a 256% increase in proceeds and a 179% increase in deal numbers over 2017, with Saudi Arabia continuing to lead the way.
EMEIA IPO activity soared by number of deals and proceeds in 2018. Looking to 2019, economic momentum remains robust. The Eurozone looks set to enjoy resilient growth and moderate inflation, while both India and the Middle East are enjoying economic reforms and a positive investment climate. Against this backdrop, the pipeline for EMEIA looks promising with a significant number of planned cross-border listings that reflect the strong confidence among issuers in the choices offered by EMEIA exchanges.
Global IPO market 2019 outlook
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. Cross-border deals look set to remain a feature of the global IPO market in 2019, 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.
The amount of market value that could go public is huge: Dropbox’s last private valuation was $10 billion; Spotify is now worth $19 billion; Pinterest is worth $12.3 billion; and Lyft is worth $11.5 billion. According to some reports, Xiaomi could be looking for a $100 billion valuation in its flotation.
Our expert team at Smeck Financial Services will pair you with the right investment for your needs and budget, helping to diversify your portfolio and set you on the path to a potentially highest return on your investment.