The global market for initial public offerings (IPOs) was “placed in a deep freeze during April and May”, but is now starting to thaw as new listings prepare to go public, according to Lina Saigol and Selin Bucak for MarketWatch.
The writers reference data from EY’s quarterly Global IPO trends report that states there were only 97 listings during Q2 of 2020, down 48% year-over-year. However, things are looking up. Paul Go, EY Global IPO Leader, is quoted as saying, “well-prepared companies, in the right sectors and business models that can successfully adjust during the pandemic, will find the right window of opportunity amid turbulent capital markets for the rest of 2020”.
In the first half of 2020, US exchanges accounted for 79% of the total deal volume of IPOs in the Americas, write Saigon and Bucak. Two companies they mention are Lemonade, an insurance start-up, and Vroom, an online used-car retailer and e-commerce company. The former is looking to raise up to US$286m in its US IPO and the latter raised US$267.5m in its IPO in June.
“With stock prices rebounding and market sentiment improving, we are seeing signs of recovery in the IPO market. Nearly a third of the IPOs in the first half of 2020 occurred in June. An IPO pipeline continues to build as issuers look to go public in the second half of 2020 or early 2021,” Jackie Kelley, EY Americas IPO leader, is quoted as saying.
In Europe, IPO volumes and proceeds declined 47% and 48% respectively from March through to May. But it’s not all bad news. Coffee group JDE Peet’s raised €2.25bn in its listing on 29 May, which Saigol and Bucak report as Europe’s largest IPO since 2018. JDE Peet’s IPO was executed virtually, and its virtual roadshow took just three days compared to the average two weeks for the more traditional roadshow. Martin Steinbach, EY Europe, Middle East, India & Africa IPO leader is also quoted in the article. He says: “During the Covid-19 pandemic, we’ve seen a new remote IPO environment, with virtual investor meetings, real-time feedback and shortened roadshow periods to limit the short-term market risks.”
MarketWatch article
A busy time for Hong Kong
In Hong Kong, the IPO market is ramping up. On Monday 29 June, Hong Kong was heading for its busiest week in four months, with six companies launching listings worth a combined US$1.7bn, according to Julia Fioretti for Bloomberg.
“The pick-up in activity comes after the second listings in the city of Chinese tech giants JD.com Inc and NetEase Inc earlier [in June] raised about US$7bn and galvanised the IPO market back into action,” Fioretti reports. The IPOs of JD and NetEase “opened up the market again” and prospective issuers have more options to choose from than biotech companies, “which had proved almost immune to the earlier market volatility”.
Endpoints News article
Biotech boom in the US
In the US, four biotech companies have filed to go public on Friday 3 July, according to Jason Mast for Endpoint News.
These companies are ALX Oncology, Berkeley Lights, Pandion Therapeutics and Kiromic Biopharma. “[They] will try to capitalise on a 2020 biotech IPO boom that the investment firm Renaissance Capital recently called ‘historic’,” writes Mast.
ALX Oncology has filed to raise US$100m, which will be its second tranche of the year. In February, it raised US$105m. Berkeley Lights is entering the market with “significant revenue on the books”, earning US$51m in revenue last year, writes Mast. The company has built a digital cell biology platform that analyses living cells from different dimensions. It’s hoped that this could accelerate drug development.
Endpoints News article
will remote/virtual IPOs become the new norm in the wake of Covid-19? Leave your comments below.