Global IPO Watch - Q3 2020

October 2020

Q3 2020

After a strong rebound in equities which continued through the summer, it was not surprising to see the equity market pulling back in Q3, particularly in September. In addition to the resurgence of COVID-19, a number of macroeconomic and geopolitical factors contributed to the increased uncertainty and stock market volatility, with mixed signals from the global economies as to the status of the recovery and upcoming US elections. In September, the market was seeing a rotation away from tech stocks into more cyclicals and value driven stocks where Europe and Emerging Markets could benefit.

Notwithstanding elevated volatility levels, Q3 saw a significant increase in IPO activity across all regions as compared with the first half of 2020, with 477 IPOs raising $116.7bn in the quarter (Q2 2020: #186 / $42.3bn).

Most notably, in the US, 82 special purpose acquisition companies (SPACs) raised $32.2bn in the quarter, representing 49% of all US IPO proceeds and 27% of global IPO proceeds. Even after excluding the surge in SPAC activity, Q3 2020 global IPO proceeds were double those in Q2 2020 and Q3 2019.

Whilst global FO activity declined 17% in Q3 compared to Q2 2020, with reductions in the Americas and EMEA only partly offset by a 29% increase in Asia-Pacific, proceeds remained relatively high at $200bn.

Ongoing concerns regarding the evolution of the COVID-19 pandemic and the impact of further lockdowns, along with the upcoming US elections in November, remain the key headwinds going into the fourth quarter.

Looking ahead into Q4, there is a solid pipeline of companies preparing for capital raises through IPOs, with Ant Group expected to lead the headlines, and FOs strengthening balance sheets or funding acquisitions and growth.