Strong IPO pipeline for 2017: Report

SINGAPORE – Soaring equity markets in the first three months of the year supported the highest number of initial public offerings (IPOs) globally since 2007, according to a report by professional services firm Ernst & Young (EY).

In the first three months of 2017, a total of US$33.7 billion (S$47.2 billion) was raised through 369 IPOs, representing a 146 per cent year-on-year increase in funds raised and a 92 per cent year-on-year rise in global number of transactions, said the report.

The growth was led by Asia-Pacific, with China, Hong Kong, Macau and Taiwan showing the most activity. Asia-Pacific markets accounted for nearly half the global proceeds from initial public listings, and 70 per cent of the global number of IPOs.

Shenzhen and Shanghai accounted for 20 per cent (73 IPOs) and 19 per cent (70 IPOs), respectively, of the global number of IPOs.

A healthy pace was also seen on public markets in Japan (27), Australia (23), Asean (14) and South Korea (12).

In the short term, EY expects the trend to continue as the China Securities Regulatory Commission is expected to clear an extensive backlog of listings by increasing the pace of IPO approvals throughout the year.

“IPO activity in Asia-Pacific has been powering ahead due to the region’s relative insulation from political uncertainty elsewhere in the world, ample liquidity in emerging markets and strengthening investor sentiment on the back of reduced volatility and steady stock market gains,” said EY Asian and Singapore managing partner, Ernst & Young, Mr Max Loh.

“Investor confidence in Asean appears robust, where the region saw a fourfold increase in funds raised at US$1.3 billion compared with the same quarter in 2016.”

New listings in Singapore were — in contrast — muted, with only one company making its public debut on the Singapore Exchange (SGX) mainboard, and two on the smaller Catalist, in the first three months of 2017.

This compares with 20 new listings on the Hong Kong Stock Exchange and 19 on the Hong Kong GEM exchange during the same period.

On the outlook for the Singapore IPO market, Mr Loh said: “There is increasing interest from companies wanting to list on the SGX. Although other forms of fundraising, such as crowdfunding and private equity, are viable alternatives for capital-raising and expansion, local entrepreneurial companies ultimately have a preference for a Singapore listing as a platform for growth.”

The sectors with listing potential in Singapore include consumer products, industrials, health care and Reits. In this quarter, the real estate sector was a key driver.

Following three large Reits IPOs last year, which raised US$1.4 billion in total, the trend continued in Q1 2017 with the US$108 million IPO of Dasin Retail Trust on the mainboard.”