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The excitement of proposed initial public offerings by ride-hailing rivals Uber and Lyft next year may not be enough to encourage other firms to follow suit, as they fear that slowing global growth and rocky stock markets dragging into next year could threaten market debut valuations.
As few as 125 firms could file for initial public offerings in 2019, compared to 190 so far in 2018, manager of IPO-focused exchange-traded funds Renaissance Capital said, adding that the figure could rise to 200 if U.S. stocks resume their climb.
Overall, total proceeds from IPOs in 2019 could be as much as $60 billion, up from $47 billion in 2018, according to the annual report from Renaissance Capital. (http://bit.ly/2QJglfW)
"Issuance and returns were very strong until the fourth quarter (of 2018), when a global selloff caused the average IPO return to sink to a measly 5 percent," Matthew Kennedy, senior IPO market strategist at Renaissance Capital, said.
"As a result, we enter 2019 on uncertain footing."
App-based cab hailing giant Uber Technologies Inc earlier this month confidentially filed for a listing with the U.S. Securities and Exchange Commission, in lock-step with its smaller rival Lyft Inc, which also filed for an IPO.
But markets have been roiled by an on-going trade spat between the United States and China, which could dampen investor enthusiasm for other 2019 IPO hopefuls like apartment-rental service Airbnb Inc, analytics firm Palantir Technologies and Stripe Inc, a digital payment company.
Kennedy said that if Uber and Lyft delayed their IPOs, it would discourage other companies, and the year would probably see even fewer than 125 companies listing on the U.S. exchanges.
Technology and biotechnology will continue to dominate listings in 2019, but investors should watch out for fintech and consumer staple startups like zero-fee stock trading platform Robinhood, and plant-based meat maker Beyond Meat, that have received high investor interest, and raised millions of dollars in funding rounds.
High-profile IPOs next year could also include photo sharing platform Pinterest, 165-year old jeans-maker Levis Strauss and workplace messaging app Slack.
Chinese companies are expected to look at U.S. markets for a listing after raising nearly $9 billion on the U.S. exchanges in 2018, the highest level since 2010, and accounting for 17 percent of total U.S. IPOs, Renaissance Capital's report said.
Online brokerages Futu Securities - China's largest, and Tiger Brokers are possible Chinese companies looking to sell shares to U.S. investors.
(Reporting By Aparajita Saxena in Bengaluru; Editing by Sweta Singh)