(Asia – 19 June 2019) Billion dollar stock market debuts from companies like Zoom, Uber and Pinterest have attracted media attention in 2019 achieving surprising multiples however new data reveals initial public offering (IPO) activity actually declined significantly this year across the globe.
Capital raised for both domestic and cross border IPOs fell by 37 percent year-over-year, with volume down 34 percent accoring to law firm Baker McKenzie. The decline from H1 2018 was sharper than expected, with a total of US$69.8 billion raised through June across 514 deals, the lowest for both measures since 2016. Cross-border IPO activity slumped particularly hard, with a 16 percent slide in volume and a 55 percent drop in value compared to 2018, noting the prolonged government shutdown delayed IPO filings for the majority of January.
A global slowdown in M&A activity, manufacturing, capital generation and IPOs confirms 2019 has been an especially tough year for both corporates and banks. The decline in cross border IPOs may reflect yet another way commerce is being slowed by growing nationalism, trade war rhetoric and a move away from globalisation. The number of deals involving European firms in China increased by 32 percent to 49 last year, while value jumped 856 percent to US$9.94 billion.
“Tensions with China may result in some slowing and more cautious activity in terms of capital formation by Chinese-operated companies looking to list in places like the United States, but that’s only one piece of the action” stated Tom Rice, Baker McKenzie partner.