With markets flush with liquidity, the number of companies going public in the quest for funds were on the rise globally, during the July-September quarter, and investor interest has been adequately responsive.
Going ahead, companies in technology, healthcare and industrials segments are likely to attract investors. Further, companies which show resilience and adapt to the post-pandemic situation would also witness investor flocking towards them if they go public, said a report by EY.
Titled 'Global IPO trends: Q3 2020', the report noted that companies in sectors hard-hit by the pandemic may have to sit on the sidelines before a new window of opportunity opens for them.
"Looking ahead, technology, health care and industrials will continue to be the more popular investor choices, along with companies that can demonstrate resilience and adaptation to the current environment, and those that have an opportunistic advantage in the new norm," it said.
Traditionally, the third quarter has been a slow period for IPOs. This year, with fewer people travelling, more working from home and markets awash in liquidity, the US stock markets have hit record highs and global IPO activities have rebounded sharply, the report noted.
"Q3 2020 was the most active third quarter in last 20 years by proceeds and the second highest third quarter by deal numbers," it said.
Exchanges around the world posted 445 IPOs with proceeds totalling $95.0b, which were 77 per cent and 138 per cent higher than Q3 2019, respectively. The stellar record by proceeds can be attributed to the most active August and September for IPOs in the last 20 years, as per the report.
Paul Go, EY Global IPO Leader said: "Although the market sentiments can be fragile, the scene is set for a busy last quarter to end a turbulent 2020 that has seen some stellar IPO performance."
He was of the view that the US presidential election, as well as the China-US relationship post-election, will be key considerations in future cross-border IPO activities among the world's leading stock exchanges.
"Despite the uncertainties, companies and sectors that have adapted and excelled in the 'new normal' should continue to attract IPO investors," he said.
As per the report, Indian stock exchanges (BSE and NSE including SMEs) ranked ninth in the world in terms of the number of IPOs in year-to-date 2020, said the EY report.
In the main markets (and NSE), there were four IPOs in Q3 2020 versus three IPOs in Q3 2019 and no IPO in Q2 2020. This represents an increase of 33 per cent compared to Q3 2019 and a significant increase in IPO activity as compared to no activity in Q2 2020, it added.
