The US companies that have sought the public markets this year are few and far between—and pale in comparison to other parts of the world. It’s been slow going on Wall Street, as more American companies put off their public debut.
In the first half of 2016, roughly half of the world’s 437 initial public offerings took place in the Asia Pacific region, according to a report from Ernst & Young, a multinational professional services firm headquartered in London. China is churning out twice as many Initial Public Offerings than anywhere else on the planet, even as regulators have pumped the brakes on public debuts, Forbes reported.
Another 36% of this year’s IPOs have been in Europe, the Middle East, Africa and India. Meanwhile, the trickle of IPOs in the United States has amounted to just 10% of total offerings.
To be sure, even as foreign countries dominate the IPO market, there’s been a significant slowdown in overall activity. The number of global offerings dropped 37% in the first six months of this year. The decline has been particularly severe in the US, though, where the number of IPOs has plunged 58% and the amount raised has dropped an even steeper 66%.
In general, companies are exercising caution before seeking the public markets. “In the short term, global IPO activity is likely to continue to be impacted by concerns regarding the direction of interest rates, particularly in the US, the UK’s decision to leave the EU and the US presidential election in November,” wrote the EY authors.
However, that doesn’t mean there aren’t scores of companies still going public or that will seek an IPO when the time is right. The report continued: “Once these sources of volatility stabilize, the outlook should be a lot more positive, supported by healthy pipelines of IPO-ready companies in many key regions and across many sectors.”
China is one country where the IPO market is brimming with activity. Of the 229 companies that have gone public in Asia Pacific this year, the largest number (87) are from mainland China. This says much more about the grip of regulators than of the number of companies that are ready to go public. There are more than 800 companies waiting in the wings for their day on the stock exchange floor, according to EY. They’re part of a backlog of companies that have formed as China attempts to keep a lid on volatility.
Some companies looking to get off the wait list are jumping to Hong Kong. For instance, China’s state-backed Postal Savings Bank is planning to go public there and could raise a whopping $10 billion in what is expected to be the year’s biggest public offering.
Already, the biggest IPOs have taken place far, far away from Wall Street. Danish wind energy provider DONG Energy raised more than $2.5 billion in its June offering, while Chinese lender Zheshang Bank raised $1.7 billion and Dutch insurance company ASR Nederland raised $1.2 billion.
As far as what’s in the pipeline, investors have high hopes for Line, a Japanese messaging provider that will list in both the US and Japan. However, there are a number of other offerings in the works that should surpass it in size. For instance, while Line won’t raise more than $1.1 billion, Samsung’s drug manufacturing arm could raise $2.6 billion and Spanish telecom provider Telxius could raise $5 billion.
All these massive deals will leave the US further in the dust, in what will surely be remembered as a dismal year for domestic IPOs.
