Bogdan Tudorache
The energy sector was among the most active on the new initial public offerings (IPOs) market, with a total of 32 billion USD, on the global IPO market analyzed by EY in 2019.
Geopolitical uncertainties and trade tensions had a strong impact on the IPO market in 2019, causing a general decline in activity, both in terms of number and value of transactions. In 2019, there were 1,115 IPOs, with a capital value of USD 198 billion, registering a 19% decrease in the number of transactions and a 4% decrease in the value of transactions, compared to 2018.
However, given the easing of trade tensions between the US, China and the EU, concerns about economic growth and other geopolitical issues, including Brexit and Hong Kong protests, the market is expected to increase strongly its activity in 2020, especially in the first half, as markets may become more volatile ahead of US presidential elections.
The Asia-Pacific region ranks first, although it registered a general decline in volume (-1%) and revenue (-8%) of transactions in 2019, followed by EMEIA and North and South America. The technology sector continued to dominate in 2019, with 263 IPO transactions, attracting USD 62.8 billion in capital.
Regarding the number of transactions, the health sector (with 174 transactions) and the industry sector (with 147 transactions) were also active. Depending on the capital attracted, the energy sector (with USD 32 billion) and the health sector (with USD 22.5 billion) performed well.
“The emergence of IPOs from the sphere of state-owned companies is beneficial for the Romanian economic landscape, given their size, as it is most often about large companies in key sectors, with positive historical financial results and stable prospects for generation of future profits. Listing is also an opportunity to adapt to a way of organizing and communicating with the market, to increase the transparency of reporting and the efficiency of the management process, as well as to implement corporate governance, so important in case of state-owned companies. We can expect that as a result of IPOs of large Romanian companies, such as Hidroelectrica and even CEC, there will be an effect of attracting the appearance of IPOs of Romanian companies with private capital, even if of smaller sizes,” says Florin Vasilică, Leader of the Transaction Assistance department, EY Romania.