Global IPO market saw significant slowdown in Q1 2022 after fter record-high levels of global IPO activity in 2021, said EY recently.
The year started off strongly, continuing the momentum of Q4 2021, with January producing the strongest opening month in 21 years by proceeds, the firm noted.
However, by the second half of the quarter, worldwide stock market declines shifted the trajectory dramatically in the opposite direction, resulting in a significant drop in overall activity, EY added.
For Q1 2022, the global IPO market saw 321 deals raising US$54.4 billion in proceeds, a decrease of 37% and 51% YOY, respectively, according to EY.
The sudden reversal can be attributed to a range of issues, including the rise in geopolitical tensions; stock market volatility; price correction in over-valued stocks from recent IPOs; growing concerns about a rise in the commodity and energy prices; impact of inflation and potential interest rate hikes; as well as the COVID-19 pandemic risk continuing to hold back a full global economic recovery, EY pointed out.
In line with the sharp decline in global IPO activity there was a considerable fall in cross-border, unicorn, mega (proceeds above US$1b) and SPAC IPOs, EY said.
There were also a number of IPO launches postponed due to market uncertainty and instability, the firm observed.
Overall regional performance
- IPO activity in the Americas region completed 37 deals in Q1 2022 raising US$2.4b in proceeds, a decline of 72% in the number of deals and a 95% fall in proceeds YOY.
- Asia Pacific recorded 188 IPOs raising US$42.7b in proceeds, a decline YOY of 16% for volume, but an increase of 18% in proceeds.
- EMEIA market IPO activity in Q1 2022 reported 96 deals and raised US$9.3b in proceeds, a decline YOY of 38% and 68%, respectively.
Asia Pacific benefits from mega IPOs
Asia Pacific’s increase in proceeds was a result of mega IPOs, said EY.
Four of the seven mega IPOs in Q1 2022 globally were listed in this region, including two of Q1’s largest IPOs by proceeds, the firm pointed out.
The region saw 188 IPOs raising US$42.7b in proceeds, surpassing Q1 2021 which had raised the highest Q1 proceeds in 21 years, EY added.
Asia Pacific highlights
- In terms of sector activity, industrials led by volume (40 IPOs, US$3.3b), followed by materials (37 IPOs, US$5.3b), while energy and telecommunications led by proceeds (US$11.2b via 8 IPOs and US$8.5b via 3 IPOs, respectively).
- Greater China saw a 28% decline in deals (97) and a modest 2% rise in proceeds (which raised US$30.1b) YOY.
- Hong Kong saw notably slower IPO activity due to recent market volatility, a severe outbreak of Omicron cases and a relatively bigger fall in the local stock market indices. While Mainland China also saw a small decline in deal numbers, proceeds rose YOY due to hosting three of the seven mega IPOs in Q1 2022.
- After the largest number of IPOs seen in 2021, Japan’s IPO activity slowed in Q1 2022, with a number of small cap IPOs coming to the market. Overall Japan saw 15 IPOs raise US$0.2b in total proceeds.
- South Korea carried its strong IPO momentum from 2021 into January 2022, with Korea Exchange’s largest ever IPO raising US$10.7b. IPO activity was slower in February, prior to South Korea’s presidential election in March. In Q1 2022, Korea saw 19 IPOs with total proceeds of US$11.2b, a 21% decline in deal numbers but a 368% rise by proceeds.
More IPO activity to come in APAC in second half of 2022
In many parts of Asia Pacific, the COVID-19 pandemic is still impacting the economy and IPO activity, said Ringo Choi, EY Asia-Pacific IPO Leader.
There is, however, optimism of more IPO activity to come in the second half of the year, he noted.
“ The IPO markets remain receptive to high-quality companies as governments and central banks continue to support economic growth and liquidity,” Choi noted. “Due to recent geopolitical and regulatory changes, IPO candidates are recommended to have a plan B in place to explore more ways to secure investors from different geographies.”
