Money

IPOs grind to a halt amid coronavirus, finds Big Four firm's report



London-listed firms raised more than £21 billion in the first half of 2020 as UK PLC in the busiest six months of fundraising for existing issuers since the last global financial crisis in 2009.

But there was only one fresh listing on the London market during the second quarter, according to EY’s latest market tracker IPO Eye.

London was Europe’s busiest market for fundraising during Q2, with more than 40% of the capital raised there. But by a combined measure of IPO and follow-on activity since January, London was ranked behind the New York Stock Exchange and Nasdaq together in first place, and Hong Kong in second.

Mike Timmins, EY Scotland IPO leader, said: “London has again confirmed its status as a pre-eminent equity market globally, leading the way in Europe for the most follow-on capital raised in Q2 2020 (over 40%).

“While IPO activity has been almost extinguished by Covid-19, in what is historically the busiest quarter of the year, the markets were focussed on supporting fundraising by existing issuers to shore-up finances to mitigate the impact of the pandemic.

“This trend is mirrored in Scotland with many listed corporates considering asking shareholders to help fund uncertainty in the coming months.”

Blackfinch Spring VCT PLC was the only main market IPO in Q2, raising £3 million in Q2 2020. The Shanghai-listed China Pacific Insurance Group also successfully raised £1.44bn by listing GDRs (Global Depositary Receipt) in London – the second listing under the London Shanghai Stock Connect programme.

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In Q2 2020 AIM didn’t register any IPO activity. Since, launching in 1995 with 10 companies valued at £82 million, more than 3,800 companies have been admitted to AIM, raising over £115 billion. Q3 2020 opened with the AIM admission of Elixirr International PLC last week.

Other 2020 highlights were:

  • Globallyin Q2, 186 IPOs raised $41 billion , a 39% decrease in number of deals and a 32% decrease in proceeds, compared with the same period last year.
  • In April and May there was a 48% year-on-year decrease in deal volumes (to 97 deals) and a 67% decrease in proceeds (to US$13.2bn).
  • Asia Pacific, whose recovery began earlier, bucked the trend in H1 with deals rising by 2% and proceeds increased by 56% (to US$34.9bn).
  • Technology, healthcare, and industrials were the most prolific producers of IPOs in the first half of 2020, together accounting for 246 IPOs (59% of global IPO activity by deal numbers) and raising $42.7 billion altogether (61% of global proceeds).
  • Technology was the strongest sector by proceeds in H1 with $17.2 billion raised (25% of global proceeds).
  • The VIX volatility index has receded from its high in March and H1 deals that were shelved and pushed into 2021 are now being considered for H2 2020 listings.

Helen Pratten, EY strategy and transactions partner, said: “IPO pipelines continue to grow in major markets. A further rebound of IPO activity is expected in H2 2020, on the back of strong June global IPO performance.

“However, uncertainties continue to be present. A possible second wave of Covid-19, US-China tension, Brexit negotiations, the US election and low oil prices could derail some of the positive global momentum we began to see in June.”

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