In 2017, global exchanges saw a record number of IPOs since the financial crisis, with strong activity in the US and a historic number of Chinese deals. This activity contradicts the belief that companies are no longer as interested in raising funds publicly. Nearly 1,700 companies listed in 2017, an increase of 44% from 2016, and the most IPOs since 2007 according to Dealogic’s database. Regionally, European listings increased by more than 40%, while over 400 companies listed on the Chinese stock exchanges in Shenzhen and Shanghai according to EY. Additionally, US companies raised $49bn, which was twice the amount of 2016, the worst year for IPOs in over a decade.
Meanwhile, there is a strong pipeline for IPOs in 2018, with many highly anticipated listings of “decacorns”, technology companies with a valuation of over $10bn, such as AirBnB, DropBox, and Spotify. Moreover, Spotify’s approach of a direct listing sheds light on a new way that these companies may be looking to go public — with their trading activity public but continuing to look for funding privately, without diluting their shares.
Despite promising indicators, the performance of some of the largest transactions in 2017 may have partially curbed investors’ enthusiasm for the year ahead. Snap Inc., the owner of one of the most prominent apps “Snapchat”, conducted the largest listing of 2017 but has since struggled to break above its initial IPO share price, with high volatility. According to the FT, Achintya Mangla, the Head of EMEA Equity Capital Markets at JP Morgan warned, that poor IPO performance was one of the biggest threats to the issuance volume in 2018. This is often the result of inefficient IPO management and the mispricing of deals. Mifid II has had an additional distortionary effect as both buy side and sell side institutions adapt to the new regulatory requirements. The preparation cost of IT systems to suit compliance expectations has reached around $2bn in 2017 (FT) and is expected to increase further in 2018.
Concerns around the efficient and compliant execution of primary capital market transactions highlights a clear need for outsourced technology solutions to support the recently increasing number and size of IPO’s. Fintech solutions can help regulatory adaptations and improvements of rigid banking processes. The Issufy platform has been especially designed to address inefficiencies in traditional capital raising methods and it seeks to modernise how capital markets function to achieve better outcomes and improve efficiency for all market participants.
Issufy offers the first web-based end-to-end ECM solution to offer a real-time regulatory solution to standardise MAR and MiFID II compliance across the syndicate. Within a transaction, the platform records the activity of all stakeholders in one always-accessible “golden source” audit trail and offers a common allocation justification framework to support banks and protect investors under MiFID II regulations. The platform offers additional support in the traditionally unstructured feedback gathering process, improving and streamlining the connection between syndicates and investors.
If you are interested in finding out more about the Issufy platform, please get in touch by sending an email to info@issufy.com or calling us at +44 208 528 1659. You can also get in touch with Nawaz Imam, Issufy’s CEO directly on nawaz@issufy.com.
Note: The information above is not exhaustive and is not legal, financial or any other form of advice; you should not rely upon it and no liability is accepted for any loss whatsoever that may arise from its use. For advice in relation to the content of this information, you should consult professional legal advisors.
