Macroeconomic factors had a major impact on global IPO issuance in Q1. But the main catalyst of the market is Chinese A-share convertible bond issuance that accounts for Japan volume via 37 deals. After the languishing performance in Chinese ECM market in , the A-share convertible market has heated up and become the most popular equity-related capital raising instrument onshore as the Dealogic A-Share Convertible Index has risen to an all-time high of 1, in March while the Dealogic A-Share Equity Index, at , is at its lowest level since November A-share convertible issuance makes up The region recorded
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Driven by historically low unemployment, increases in employee wages and interest rate cuts, remained resilient against foreign trade wars and recession indicators that persisted from the prior year. There was a marked reduction in the number of foreign private issuers on US markets. However, a slowdown in the IPO markets towards the end of the final quarter was marked by increasingly volatile equity markets, global trade and geopolitical concerns and uncertainty around Brexit.
Companies are looking to streamline their businesses and maximize shareholder value by divesting segments that may not align with their core competencies.
Megadeals were dominated by financial-sponsor backed companies. SPACs lead in volume three out of four quarters in , and looking forward, the surge in SPACs will likely translate into greater activity in deal markets as they fulfil their acquisition strategies.
Life Sciences IPOs continued to be popular with investors, with biotechnology and medical device companies featured prominently. The TMT sector, which consisted of almost only technology companies in , produced just under half of total proceeds. However geopolitical announcements, US election results, and Fed policy decisions will need to be taken into account.
Despite significant attention and the prospect of a less expensive offering as no underwriters are involved , direct listings appeal to a unique subset of companies that benefit from public market liquidity and valuation, without raising dilutive capital from the investment community.
Both issuers and investors are evaluating the suitability of a direct listing for their situation. Stronger than anticipated macro-economic indicators, coupled with a backlog of IPOs could result in an uptick in issuances.
Given that is an election year in the US, there may be a flurry of IPOs in the first half of the year, and with some lessons learned around the IPO process, IPOs may again provide strong competition to the broader indices. The IPO markets in experienced notable volatility, particularly in the latter part of the year as investor sentiment became more cautious. Current economic trends and investor sentiment indicate that the IPO markets will continue to remain robust into the new year.
The US economy faced serious challenges in , including an escalating trade war with China and slower global economic growth. The US manufacturing sector fell into recession, restraining spending throughout the entire economy and causing the Fed to cut rates three times in the second half of the year. Given the challenging environment, real GDP growth for will likely slow to just 2.
GDP growth is expected to slow further in as the challenges faced in persist into next year. Even if an interim trade deal with China is reached, trade policy uncertainty will remain elevated, which will continue to hold back business investment and threaten a more pronounced downturn. Select 'Deals' as your topic of interest in PwC's preference center. Direct listings DL have become a hot topic among private companies, particularly those in the technology sector, with the recent listings of Slack and PwC helps guide companies through the initial public offering IPO process to make their transition to going public as efficient as possible.
Insight into the costs of an IPO can help outline an IPO to the board of directors, employees and other stakeholders within the company. The number of life sciences companies raising capital through public offerings has been rising steadily for the past few years. David Ethridge. Daniel Klausner. Derek Thomson. We have received your information.
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ECM Highlights: 2019 Q1
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