Initial public offerings remained sluggish in the first quarter of 2023 thanks to a lukewarm stock market, entrenched inflation and unexpected global banking industry turbulence, according to the latest EY Global IPO Trends Q1 2023.
The report showed total IPOs dropped 8% to 299 while money raised plunged 61% to $21.5 billion year-over-year (YOY).
Technology companies, which have been a mainstay of IPO activity in recent years, experienced some sharp declines in valuations while the turmoil in the crypto markets and the global banking industry exacerbated the situation.
Technology continued to lead in IPO volume, but four of the top 10 listings in Q1 2023 were in the energy sector.
High liquidation and poor post-listing performance of de-SPACs also dampened investors’ appetite for new IPOs.
Q1 saw SPAC IPO activity hit a six-year low in terms of volume, with proceeds also down to levels not seen since 2016.
As market conditions remain challenging and many promoters of SPACs listed in early 2021 need to complete or unwind their transactions, SPAC IPO activity is likely to be dampened in the near term.
As for regional performance, the report noted EMEIA (Europe Middle East India and Africa) was the hardest hit as many companies withdrew or postponed their IPO filings due to market conditions.
IPO activity fell 19% by numbers and 36% by proceeds YOY, recording 84 IPOs raising $6.2 billion for Q1.
By contrast, the Americas was in line with Q1 2022, but it was well below the levels seen in comparable periods over the last decade, with 40 deals and $2.6 billion in proceeds, a respective increase of 11% and 9%. YOY.
On US exchanges, there were 31 deals, eight of which were in excess of $50 million.
Although the Asia-Pacific IPO market accounted for 59% of global IPO deals, its activity declined 6% by number and plummeted 70% by proceeds, respectively, YOY.
Overall there were only 175 deals and $12.7 billion in proceeds for the quarter.
Despite the lifting of almost all its pandemic control measures earlier this year, the mainland China market was a bit quieter than usual, but it is on a healthy projected track and still comprised over 40% of all global IPO proceeds, the report added.
The report said, Hong Kong, typically a powerhouse for new listings, was uncharacteristically quiet. Overall, Asia-Pacific, took a “wait and see” attitude, as investors keep their powder dry and look for further indicators of market recovery.
“Amidst persistent macroeconomic and geopolitical uncertainty, exacerbated by stress in the global banking system, IPO windows are fleeting and funding conditions are getting tougher, with investors prioritising value over growth,” said Paul Go, EY global IPO leader.
He said, “IPO-bound companies need to focus on building sustainable businesses with strong fundamentals to be well-positioned in a volatile environment and meet the challenges and opportunities of going public.”
©Markets Media Europe 2023
