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How can you prepare to seize the right moment?

Global IPO market went from record-breaking to full-on abating. Learn where the trends are shifting for 2023.


In brief

  • In 2022, global IPO volumes fell by 45%, with proceeds down by 61% YOY.
  • Compared to pre-pandemic times, number of deals are up 16%. 
  • Asia-Pacific accounted for 67% of global IPO proceeds.

After a record-breaking 2021, the global IPO market took a sharp turn in the opposite direction in 2022. With only 1,333 IPOs raising US$179.5b, IPO activity dipped 45% and 61% by number of deals and proceeds, respectively, year-over-year (YOY). As the average deal size shrank due to lowered valuation and poor stock market performance, we didn’t see as many large IPOs launch in 2022. 

Throughout 2022, global IPO activity was impacted by increased market volatility and other unfavorable market conditions, along with the dismal performance of many IPOs listed since 2021. Amid an environment defined by higher inflation and rising interest rates, investors have spurned new public companies and turned to less risky asset classes. Similarly, financial-sponsored IPO activity took a steep fall of 77% and 93% by number and proceeds, respectively. Most special purpose acquisition companies (SPACs) listed from late 2020 are also reaching their two-year window, and they must now either find a target to merge or return the IPO proceeds to the investors. While these numbers represent a stark decline from 2021, global IPO deals still turned up a 16% increase by number when compared to pre-pandemic 2019. 

Despite the fact that market activity was mostly down across the board, there were a few select industries and regions that did achieve modest success. The technology sector continued to lead by volume accounting for 23% of deals, while the energy sector dominated by proceeds, accounting for 22% in 2022. Among listed mega IPOs, which are defined as those that raised proceeds of more than US$1b, the average proceeds in 2022 are 45% higher than those in 2021, on the back of strong valuation for the mega energy IPOs that took place this year. Certain markets such as Mainland China, Middle East and some ASEAN counties have performed relatively well despite the significant global underperformance. 

“A record year for IPOs in 2021 gave way to increasing volatility from rising geopolitical tensions, inflation and aggressive interest rate hikes,” says Paul Go, EY Global IPO Leader. “Weakened stock markets, valuations and post-IPO performance have further deterred IPO investor sentiment,” he adds.


Download our latest IPO report

The EY Global IPO Trends 2022 report provides deeper analysis and insights, including regional and country data.

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Overall regional performance: waiting for a comeback in 2023 and more favorable market conditions to return

The Americas’ IPO activity sank to lows not seen since the peak of the great recession. It hit a 13-year low by volume and a 20-year low by value as markets were affected by volatility and policies undertaken to combat inflation. Both number of IPOs and proceeds took a nosedive, with 130 deals raising US$9b, down by 76% and 95%, respectively, YOY. Not surprisingly, most of the Americas’ IPOs (69%) were on US exchanges. 


The Asia-Pacific IPO market had 845 IPOs totaling US$120.6b in proceeds, taking the smallest hit by the global economic downturn and geopolitical tensions, accounting for 63% of deals and 67% of funds raised in 2022. Mainland China is on course towards another record-breaking year of capital raising by the close of 2022.


EMEIA IPO activity fell by 53% and 55% by number and proceeds, respectively, recording 358 IPOs raising US$49.9b. Even though Europe IPO activity was down 78%, due to geopolitical turmoil, MENA was up 115% by proceeds as it benefited from the large energy and other IPOs completed, coupled with the initiative rolled out by the government’s privatization plan. EMEIA also delivered 5 of the top 10 IPOs.  

2023 outlook: waiting for the right window while focusing on fundamentals and ESG 

Looking ahead to 2023, there is a strong IPO pipeline on the horizon. Even though IPO activity will likely remain somber through at least the first quarter, more favorable conditions seem to be set in place for global IPO activity to regain greater momentum by the second half of the year. 


For the IPO market to become more active again, there are a number of prerequisite conditions: positive sentiment and an uptick in stock market performance; lower inflation and ending of the interest rate hikes; easing of geopolitical tensions; and diminished COVID-19 pandemic effects on the economy. 


Many prospective IPO companies are still going to take the “wait-and-see” approach, holding out for the right window. For now, investors will focus on a company’s fundamentals, such as revenue growth, profitability and cash flows, over just growth projections. 


As there is a positive correlation between companies’ post-IPO share price performance and the communication of their environmental, social and governance (ESG) strategies, investors will also increasingly be looking at the company’s ESG agenda.   


“As pipeline continues to build, many companies are waiting for the right time to revive their IPO plans,” says Go.


“Still, with tightening market liquidity, investors are more risk-averse and favor companies that can demonstrate resilient business models in profitability and cash flows, while clearly articulating their ESG agendas,” he adds.


Guide to going public

Our Guide to going public covers strategic considerations before, during and post-IPO.

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To get more insight into the steps companies need to take to maximize their chances of IPO success, download our Guide to going public (pdf).



Previous IPO reports


Summary

The EY Global IPO Trends 2022 highlights the decline of the global IPO market over the course of 2022. Many IPOs were postponed due to volatility caused by macroeconomic challenges, market uncertainties, increasing volatility and falling global equity prices.