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Global IPOs Near Pre-Crisis Levels

Initial public offerings raised close to $200 billion in the most active year for going public since 2007.

More companies went public in 2017 than in any year since the financial crisis, according to consulting group EY. The firm recorded 1,624 initial public offerings globally in 2017, with companies raising a total of $188.8 billion. Last year, there were 1,093 IPOs with $134.5 billion raised.

EY said this was the most active year for initial public offerings since 2007, when 1,974 IPOs raised $338.4 billion. In a statement accompanying the report, Martin Steinbach, an IPO and listing services leader at EY, said this year’s momentum has IPO candidates “lining up” for 2018.

“The outlook appears bright, driven by lower volatility across regions, high valuation levels, and a renewed appetite for cross-border IPOs, particularly in the U.S., Hong Kong, and London,” he said. “A healthy global pipeline across a broad range of sectors and markets suggests IPO activity levels will be up and with more megadeals increasing the global proceeds in 2018.”

According to the report, IPO activity in Europe, the Middle East, India, and Africa surged this year, with 469 deals raising $64 billion, up from the $37.7 billion raised from 285 IPOs in 2016. The region was the second-most active this year, with only Asia-Pacific countries recording higher levels of IPO deals and proceeds.

Frédéric Guignard, European equities fund manager at Aviva Investors, told Institutional Investor that the current environment in Europe is favorable for IPOs, due to the low interest rates and low volatility.

“A sound economy in Europe is giving confidence to investors,” he said. “Positive earnings momentum is helping companies planning an IPO to show promising earning expectations. Added to this, equity valuations are high and that is also attractive to IPO candidates.”

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The EY report also noted that North America and South America experienced a 68 percent climb in IPOs from last year, driven by an increase in cross-border listings on U.S. exchanges. In the U.S., 174 companies went public, raising $39.5 billion, up from the $21.3 billion raised by 112 IPOs in 2016.

Almost a quarter of U.S. IPOs came from other countries, said Jackie Kelley, EY’s Americas IPO markets leader, in a statement accompanying the report.

“U.S. exchanges remain the top destination for foreign companies,” she said. “A healthy pipeline continues to build, led by health care and technology companies. The result is a strong close to the year and great momentum heading into 2018.”

The Asia-Pacific region, which had the most companies go public, witnessed 935 IPOs in 2017, compared to 638 a year earlier. Meanwhile, the total raised amounted to $73.2 billion, up only slightly from $71.5 billion in 2016.

Ringo Choi, EY’s Asia-Pacific IPO leader, attributed these trends to a “thriving market in small-cap IPOs” in China, Japan, and Australia.

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