UPDATE: IPO Trends for Q2 2020 – Locally and Globally
Ernst & Young (EY) recently released its Global IPO Trends: Q2 2020 report and here’s what local EY expert Tim Rahall said to expect globally, and for OC specifically. (Rahall is an EY partner for assurance, audit and audit services.)
Tech, industrial and healthcare sectors dominated globally, with 246 IPOs raising more than $42 billion. While some global markets saw a slowdown due to COVID-19 and all its repercussions, they can expect a significant rebound of IPO activity in the second half of this year, Rahall said.
The impact of the pandemic continued to play a significant role in declining IPO activity in the first half of 2020.
Overall, Q2 saw a decline in IPO activity from Q2 2019 across all regions by deal numbers and for the Americas and EMEIA (Europe, the Middle East and Africa) by proceeds.
– larger tech companies are looking at acquisitions of companies with reduced valuations that have differential tech
– as valuations get higher, more companies will consider IPOs. There was a backlog going into the beginning of the year. We are seeing some life science and techn activity, most of which was already in the works pre-pandemic.
– OC continues to be a leader in med-devices. And, with the recent successful med-device IPOs and current valuations of med-device companies, this could be an area to look to in the future for another OC IPO
The Impact of COVID-19:
Beneficiaries of the global pandemic have clearly been companies that provide tech resources to enable virtual communication, including telemedicine.
Life sciences companies with tech-enabled resources, some of which are headquartered in OC, could get better valuations than pre-COVID-19, given the continued demand.
Companies in the gaming space have seen significantly increased revenues and user engagement with valuations at all-time highs, both of which are strong factors to test the equity (IPO) or debt markets in the future.
Notably, with stock prices rebounding and market sentiment improving, EY is seeing signs of recovery in the IPO market in the Americas.
Over one third of the IPOs in the first half of 2020 occurred in June. The IPO pipeline continues to build as issuers look to go public in the second half of this year or early next year.
Nationally, the health care and tech sectors continued to have the highest level of IPO activity in the US in year-to-date 2020.