Coronavirus outbreak derails IPOs

With the spread of coronavirus (COVID-19) to several countries and the World Health Organization (WHO) declaring it as a pandemic, the ripple effects can also be felt in financial markets with many companies putting their planned initial public offerings (IPO) on hold, according to GlobalData, a leading data and analytics company.

In May 2019, oil and gas company Wintershall DEA shared its plans to issue shares in an IPO ready for listing by the end of 2019. The company then expected to float its shares in 2020. However, on March 9, 2020, the company announced that the IPO may be delayed due to coronavirus outbreak and the ongoing oil price war between Saudi Arabia and Russia.

Similarly, chemical company Rossari Biotech filed a draft prospectus with the Securities and Exchange Board of India (SEBI) in December 2019 for an IPO. However, on March 12, 2020, the company announced a postponement of its IPO citing turmoil in equity markets due to COVID-19.

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “Fear of a dampened stock market debut, on the back of unfavorable market conditions due to the coronavirus outbreak and concerns related to not getting a good response from investors, could be the trigger for management preferring to wait until market conditions improve. Nevertheless, some companies also see opportunities amid the coronavirus pandemic. 

“For instance, Chinese firm Sansure Biotech (Sansure) applied for an IPO on March 5, 2020. Sansure is among the six firms approved to sell coronavirus test kits in China and has already produced four million kits as of February 29, 2020. The company aims to raise ¥557m (US$80m) through the IPO.”

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