Multiple crosswinds superseded global IPOs despite market rally in 2023

• Global IPO volumes fell 8% in 2023 with proceeds down by 33% year-on-year
• EMEIA IPO market on its path to recovery with a 7% rise in volumes, but with a 39% decrease in proceeds
• IPO market in Ireland remains muted, albeit with increased optionality for capital raising across private markets

Dublin, 15 December: The Global IPO market closed 2023 with 1,298 initial public offerings raising US$123.2 billion, representing an 8% decrease in volume and a 33% decrease in proceeds year-on-year according to the 2023 EY Global IPO Trends Report. The global IPO market has experienced shifting landscapes in 2023, with improved Western market sentiment and a pickup in deal volumes in both the Americas and EMEIA (Europe, Middle East, India and Africa) counterbalanced by China's cool-down, as well as a contrast between hot developing market small-cap deals and muted larger offerings.

Despite a strong market rally and low volatility index on the back of positive economic data, public offerings have remained subdued in many developed markets, with the exception of a brief September window in the US. After two years of muted listings, IPO issuers and investors were enthusiastic for a market upswing, but this enthusiasm dampened after September when a number of high-profile IPOs did not meet market expectations. Equity investors focus on very large technology stocks in the face of macro uncertainty also left less appetite for new listings. Monetary policies set by central banks globally were another significant factor affecting IPO activity.

The EMEIA IPO market is on its path to recovery in 2023, with a 7% rise in volume year-on-year, albeit with a 39% decrease in proceeds. The region rounded out the year with 413 deals, raising a total US$31.1billion. Five of the world’s largest 10 deals in 2023 were from EMEIA, however the region had a greater number of smaller IPOs than large ones compared with 2022, hence the fall in total proceeds. Overall in EMEIA, the outlook for 2024 is optimistic but cautious, given an unpredictable market environment. In various countries, governments and regulators are taking steps to stimulate capital markets to boost investment in disruptive innovation.

Globally, the industrials and consumer sectors had positive movement this year, with industrials having the most deals and consumer being the only sector to increase by both IPO volume and proceeds. The technology sector continued to experience declines driven by underwhelming investor reception to high-profile tech IPOs in the US and with generative artificial intelligence (GenAI) startups still at the venture capital stage rather than at IPO. However, technology IPOs continued to lead the pack for proceeds for 2023. There has also been a significant downturn in IPO volume and proceeds within the health and life sciences sector – particularly in Mainland China and the US. The number of companies backed by private equity and venture capital within this sector plummeted by 78% since 2021.

Fergal McAleavey, EY Ireland Corporate Finance Partner, says:

“IPO activity has faced a challenging period in 2023 both globally and here in Ireland, although we are optimistic that there is light at the end of the tunnel for companies and investors. Enthusiasm for IPOs among investors remains high globally and smaller deals are emerging with improved after-market performance. Moderating inflation globally and the potential for interest rate decreases in key markets could attract investors back to IPOs by improving liquidity and return outlooks. However, sustained geopolitical instability may undermine confidence. For IPO-bound companies, it will be important to keep a clear focus on building fundamentals and managing price expectations to capitalise when the opportunities arise.

“Here in Ireland, IPO activity continues to remain muted although any improvements in global market conditions, as well as an uptick in global IPOs could have a positive, knock-on effect domestically. An IPO here in Ireland may act as a stimulus to other companies considering going public and we are hopeful we’ll see an increase in IPO activity in Ireland in 2024. It’s important to remember, however, that successful companies today have much more optionality and access to private capital than several years ago. The volume of capital – ‘dry powder’– is so significant that while an IPO remains a really strong option for companies, it’s no longer the ‘holy grail’ it once was. Just last week, for example, we saw SoftBank Corp complete a majority investment in Cubic Telecom at a valuation of €900 million, which represented the largest ever software deal in Ireland. This investment enables Cubic to access the capital it requires to power further global growth as well as rewarding staff and investors in the same manner that an IPO could.

“More broadly, for IPO candidates looking to go public in 2024, it will be important to be well-prepared. Key factors to consider are: inflation and interest rate, government policies and regulations, recovery of economic activities, geopolitical tensions and conflicts, ESG agenda, and global supply chain. Multitrack options should also be considered, from alternative IPO processes (direct listing or dual and secondary listings) to other financing methods (private capital, debt or trade sale).”

Regional performance: 2023 wasn’t the year the regions thought it would be

Americas: While the number of Americas IPOs in 2023 was up 15% compared with 2022, proceeds jumped nearly three times that of 2022 due to several high-profile deals. In total, 153 deals raised US$22.7b, with over 85% of them listing on US exchanges. The region had seven deals that raised over US$500m in 2023 vs. just four in 2022, but smaller deals continue to dominate IPO activity on US exchanges. Brazil’s IPO market surpassed a two-year absence of listings amid global instabilities, marking the most prolonged drought in over two decades. In Canada, its main exchange featured only one IPO each in 2022 and 2023 – this level of IPO activity is unprecedented on this exchange over the last two decades. Overall in the Americas, weak IPO trading performance, rising interest rates and geopolitical concerns have contributed to challenging capital raising conditions for companies seeking to access the public markets.

Asia-Pacific: This year, 732 companies went public in Asia-Pacific raising US$69.4b, a YOY fall of 18% and 44% respectively. Facing economic and geopolitical headwinds, 2023 was challenging for Asia-Pacific’s IPO markets, with the two powerhouses of Mainland China and Hong Kong continuing to decline in volume and value. The average deal size of cross-border listings from Mainland China to the US also fell to its lowest level in 20 years, with a 93% drop from its 2021 levels. However, Mainland China remained a vital source of IPO funding, contributing over 40% of global proceeds in 2023. In the Asia-Pacific IPO market, well-capitalised companies backed by private equity and venture capital in the environmental, social and governance (ESG) and technology spaces have the capital to wait out until valuation improves. Realistic pricing and post-IPO performance may encourage some of these companies that are prepared for IPO with strong governance and a good equity story to list in 2024.

EMEIA: The EMEIA IPO market is on its path to recovery, with a 7% rise in volume, even with a 39% decrease in proceeds, on the back of large deals from MENA, heightened activity in India and CESA, as well as a few high-profile cross-border IPOs to the US. This region rounded out the year with 413 deals, raising US$31.1b. And, even though 5 of the world’s largest 10 deals were from EMEIA, the region had a greater number of smaller IPOs than large ones compared with 2022, hence the fall in total proceeds. MENA continued to dominate the top 10 EMEIA IPOs in 2023, accounting for 6 of those IPOs. In the UK, challenging market conditions, compounded by high inflation and elevated interest rates, have muted IPO activity. Overall in EMEIA, the outlook for 2024 is optimistic but cautious, given an unpredictable market environment. In various countries, governments and regulators are taking steps to stimulate capital markets to boost investment in disruptive innovation.

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About the data

The data presented here is available on ey.com/ipo/trends. 2023 refers to the full calendar year and covers completed IPOs from 1 January 2023 to 4 December 2023, plus expected IPOs by 31 December 2023 (forecasted as of 4 December 2023). All data contained in this document is sourced from Dealogic, Capital IQ and Wind, and EY analysis unless otherwise noted. The Dealogic data in this report are under license by ION. ION retains and reserves all rights in such data. SPAC data are excluded from all data in this report, except where indicated.

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