Global IPO activity slowed dramatically in April and May, with a 48% decrease by volume (97 deals) and a 67% decrease in proceeds ($13.2 billion) compared with April and May 2019.
This dragged down 1H 2020 regional activities compared with 1H 2019 and overall deal volume (419 deals) and proceeds ($69.5 billion) decreased 19% and 8%, respectively.
“In Romania, the capital market has developed significantly in recent times towards bond issues, compared to the IPO area, where the pace is still slow. The first half of 2020 was strongly affected by the spread of the COVID-19 virus, especially from the perspective of the IPOs. Although long awaited, listings of state-owned companies have been postponed again as a result of the parliamentary vote to temporarily freeze the sale of any part of state-owned companies,” said Florin Vasilica, Strategy and Transaction Leader, EY Romania.
He added an increase in the supply of shares on the Romanian capital market is needed to maintain the eligibility criteria for emerging market status. Potential listings in the retail and IT sector are currently being announced and we may see greater interest in the AeRO market from companies.
“However, although the efforts of the Bucharest Stock Exchange and the Financial Supervisory Authority have been considerable in promoting the benefits of listing on the stock exchange, the preference of Romanian entrepreneurs remains for financing through credit institutions”, said Vasilica.
The technology, industrials and health care sectors dominated in the first half of 2020. Technology saw 87 IPOs raise $17.2 billion, industrials saw 83 IPOs raise $9.6 billion and health care had 76 IPOs that raised $15.9 billion.
Given the COVID-19 outbreak and its negative impact on global economic activities, in the short to medium term governments around the world will continue to implement policies and stimulate economies against rising unemployment. At the same time, central banks will inject more liquidity into the financial systems. Both actions bode well for equity markets and IPO activity in the second half of 2020, the report noted.