How do you prepare now for the moment your IPO is ready to take flight?

By Paul Go

Asia-Pacific EY Private Assurance Leader

Leads Chinese and multinational companies in client servicing domain. Heads Hong Kong real estate, hospitality and construction sector audit group.

Contributors
4 minute read 28 Jun 2023

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In Q2 2023, emerging markets are thriving amid a slow global IPO market.

In brief
  • In the first half of 2023, global IPO volumes fell 5%, with proceeds down 36% YOY.
  • The US had its largest offering since November 2021.
  • Asia-Pacific continues to dominate with an approximate 60% share of global IPOs.

The first half of 2023 recorded 615 IPOs with US$60.9b capital raised, a 5% and 36% decrease year-over-year (YOY) respectively. Larger deals came to the market in Q2 compared to Q1, and the gap has narrowed, even though it has been a slow recovery. These modest results reflect slower global economic growth, tight monetary policies and heightened geopolitical tensions. However, some emerging markets are booming with IPO activities, as they benefited from the global demand for rich mineral resources, their vast population, growing unicorns or entrepreneurial SMEs. These and other findings are published in the EY Global IPO Trends Q2 2023.

While the technology sector has continued to be the leading sector in IPO activities to date in 2023, IPO proceeds raised by companies from the energy sector have dwindled on the back of softer global energy prices. As well, cross-border activity has experienced a significant surge in both volume and proceeds, primarily attributed to the growing influx originating from China and entering the US and a steady flow into the Swiss Stock Exchange. 

The SPAC market continued to be challenged with negotiations becoming increasingly complex. There is still an exorbitant number of SPACs yet to announce or complete a de-SPAC facing liquidation by the expiration period in the next six months. It is expected that SPAC IPO activity will return to more sensible and sustainable levels seen pre-2021. 

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Overall regional IPO performance: Q2 performed better than Q1

While the number of IPOs remained flat, the Americas region saw an increase in proceeds of 86%, raising $US9.1b, YOY. This growth was primarily attributed to a single mega spin-off IPO, which happened to be the largest US IPO since November 2021. The US experienced an uptick driven primarily by a few large deals and recent improvements in market sentiment could be a sign for more US IPO activity later in 2023 or 2024. However, despite the positive developments, it may take the overall Americas IPO market longer to recover than many market participants forecasted at the beginning of the year due to the unforeseen banking crisis in 2023. 

In the year to date (YTD), the Asia-Pacific IPO market has maintained its position as the global leader in IPO volume and value, with an approximate 60% share. Of the top 10 global IPOs, half were from Mainland China and one was from Japan. The region saw 371 IPOs raising US$39.4b in this period, a YOY decline of 2% and 40% respectively – proceeds were down significantly due to a cooler-than-expected Mainland China IPO market, with many large IPOs waiting on the sidelines. For the first time in over 20 years, Indonesia has surpassed Hong Kong in the global stock exchange rankings by volume. 

EMEIA IPO activity has continued to shrink, with 167 listings raising US$12.4b YTD, a 12% and 50% decline respectively YOY. Despite this, the region kept its position as the second largest IPO market with 27% of all IPO deals, and the second biggest IPO at US$2.5b. India exchanges also broke a two-decade streak, jumping to the top spot in deal count. However, inflation levels in most European countries remain challenging, and the lack of liquidity continues to hold back IPO activity. 

Q3 2023 outlook: pipeline still in holding

A resurgence in global IPO activity is anticipated to start late 2023 as economic conditions and market sentiment gradually improve with the tight monetary policy entering its final stage. 

After the one mega spin-off IPO debut in the US that outshone all other traditional IPOs, there are strong indications that this trend will persist. Large corporate spin-offs and carve-out listings will likely surface across major markets, as companies seek to create more shareholder value through divestiture, while investors lean toward mature, profit-making businesses amid a yet-to-revive IPO market. 

Understanding the different requirements of each IPO market that companies plan to enter is essential to meet investor expectations and avoid potential delays due to regulatory issues. Investors will continue to be more selective, orienting toward companies with solid fundamentals and proven track record. All options, from alternative IPO process (direct listing or de-SPAC merger) to other financing methods (private capital, debt or trade sale), should be considered. 

Against the backdrop of a divergent global economy and unpredictable geopolitical landscape, some stock markets are reaching a long-time high and enjoying low volatility. Certain theme-centric sectors such as technology and clean energy are signaling an upswing in IPO activity. Large, well-established companies are demonstrating enduring resilience, while growth narratives with more realistic and acceptable valuation are becoming more receptive by the market. 

In this shifting environment, companies need to prepare now to be ‘IPO-ready’ for any forthcoming windows.

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    Column chart showing global IPO activity by number of IPOs from 2019-2022 (full years), and year-to-date 2023. Complete data is as follows: full year 2019, 1,146; full year 2020, 1,452; full year 2021, 2,436; full year 2022, 1,415; year-to-date 2023, 615.

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    Column chart showing global IPO activity by IPO proceeds (US$b) from 2019-2022 (full years), and year-to-date 2023. Complete data is as follows: full year 2019, 208.3; full year 2020, 271.3; full year 2021, 459.9; full year 2022, 184.3; year-to-date 2023, 60.9.

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    Column chart showing IPO activity by geography in year-to-date 2023, in terms of percentage change versus year-to-date 2022. The complete data per regions showing is as follows: Globally, the number of IPOs is down five percent, with total IPO proceeds down thirty-six percent. For the Americas, the number of IPOs is the same as year-to-date 2022, with IPO proceeds up eighty-six percent. For Asia-Pacific, the number of IPOs is down two percent, with IPO proceeds down forty percent. For EMEIA, the total number of IPOs is down twelve percent, with total IPO proceeds down fifty percent.

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    Column chart showing the number of IPOs by sector in year-to-date 2023, in terms of percentage change, versus 2022 and 2021. The complete data is as follows: The Technology sector has 124 IPOs in year-to-date 2023 versus 328 in 2022 and 631 in 2021. The Industrials sector has 123 IPOS year-to-date in 2023 versus 222 in 2022 and 314 in 2021. The consumer sector has 103 IPOs in year-to-date 2023 versus 187 in 2022 and 306 in 2021. The materials sector has 87 IPOs in year-to-date 2023 versus 217 in 2022 and 303 in 2021. The health and life sciences sector has 58 IPOs in year-to-date 2023 versus 168 in 2022 and 391 in 2021. The energy sector has 35 IPOs in year-to-date 2023 versus 93 in 2022 and 141 in 2021. The media and entertainment sector has 22 IPOs in year-to-date 2023 versus 29 in 2022 and 48 in 2021. The retail sector has 22 IPOs in year-to-date 2023 versus 50 in 2022 and 62 in 2021. The real estate sector has 19 IPOs in year-to-date 2023 versus 54 in 2022 and 106 in 2021. The financials sector has 11 IPOs in year-to-date 2023 versus 44 in 2022 and 107 in 2021. The telecommunications sector has 11 IPOs in year-to-date 2023 versus 23 in 2022 and 27 in 2021.

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    Column chart showing IPO proceeds by sector (US$b) in year-to-date 2023 versus 2022 and 2021. The complete data is as follows: technology, 14 in year-to-date 2023 versus 37.4 in 2022 and 149.1 in 2021; Industrials, 13.1 in year-to-date 2023 versus 30.5 in 2022 and 64.4 in 2021; consumer, 9.2 in year-to-date 2023 versus 9.8 in 2022 and 42.3 in 2021; energy, 8.5 in year-to-date 2023 versus 40 in 2022 and 27.7 in 2021; materials, 5.3 in year-to-date 2023 versus 16.4 in 2022 and 22.7 in 2021; health and life sciences, 5.3 in year-to-date 2023 versus 17.5 in 2022 and 66.7 in 2021; financials, 2.1 in year-to-date 2023 versus 9.5 in 2022 and 33.7 in 2021; real estate, 1 in year-to-date 2023 versus 4 in 2022 and 16 in 2021; media and entertainment, 1 in year-to-date 2023 versus 1.3 in 2022 and 6.4 in 2021; retail, 0.9 in year-to-date 2023 versus 8.0 in 2022 and 15.2 in 2021; telecommunications, 0.5 in year-to-date 2023 versus 9.9 in 2022 and 15.7 in 2021.

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  • Data definitions for all charts

    The data presented on this webpage and in the EY Global IPO press release Q2 2023 is from Dealogic and EY analysis. This document includes data derived from data provided under license by Dealogic & ION. Dealogic & ION retains and reserves all rights in such data. 

    Q2 2023 refers to the second quarter of 2023 and covers completed IPOs from 1 April to 19 June 2023, plus expected IPOs by 30 June 2023 (forecasted as of 19 June 2023). Q2 2022 refers to the second quarter of 2022 and covers completed IPOs from 1 April to 30 June 2022.  YTD 2023 refers to the first six months of 2023 and covers completed IPOs from 1 January 2023 to 19 June 2023, plus expected IPOs by 30 June 2023 (forecasted as of 19 June 2023). YTD 2022 refers to the first six months of 2022 and covers completed IPOs from 1 January 2022 to 30 June 2022.  Sources: EY analysis, Dealogic.

    • In compiling the IPO statistics included in these reports and press releases, we focus only on IPOs of operating companies and define an IPO as a "company's offering of equity to the public on a new stock exchange".
    • This report includes only those IPOs for which Dealogic and EY teams offer data regarding the first trade date (the first day on which the security start trading on a stock exchange), and proceeds (funds raised, including any over-allotment sold).
    • The first trade date determines which quarter a deal is attributed to. Postponed IPOs, or those that have not yet been priced, are therefore excluded. Over-the-counter (OTC) listings are also excluded.
    • In an attempt to exclude non-operating company IPOs such as trusts, funds and special purpose acquisition companies (SPACs), companies with the following Standard Industrial Classification (SIC) codes are excluded:
      • 6091: Financial companies that conduct trust, fiduciary and custody activities.
      • 6371: Asset management companies such as health and welfare funds, pension funds and their third-party administration as well as other financial vehicles.
      • 6722: Companies that are open-end investment funds.
      • 6726: Companies that are other financial vehicles.
      • 6732: Companies that are grant-making foundations.
      • 6733: Asset management companies that deal with trusts, estates and agency accounts.
      • 6799: Special purpose acquisition companies (SPACs).
  • Definitions for IPO performance by geography

    • Africa includes Algeria, Botswana, Egypt, Ghana, Kenya, Madagascar, Malawi, Morocco, Namibia, Rwanda, South Africa, Tanzania, Tunisia, Uganda, Zambia and Zimbabwe.
    • Americas includes Argentina, Bermuda, Brazil, Canada, Chile, Colombia, Ecuador, Jamaica, Mexico, Peru, Puerto Rico and the United States.
    • ASEAN includes Brunei, Cambodia, Guam, Indonesia, Laos, Malaysia, Maldives, Myanmar, North Mariana Islands, Philippines, Singapore, Sri Lanka, Thailand and Vietnam.
    • Asia-Pacific includes ASEAN (listed above), Greater China (as stated below), Japan, South Korea, Australia, New Zealand, Fiji and Papua New Guinea.
    • EMEIA includes Armenia, Austria, Bangladesh, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Kazakhstan, Luxembourg, Lithuania, Netherlands, Norway, Pakistan, Poland, Portugal, Russian Federation, Spain, Sweden, Switzerland, Turkey, Ukraine and United Kingdom plus the Middle East countries (listed below) and Africa countries (listed above).
    • Greater China includes Mainland China, Hong Kong, Macau and Taiwan.
    • India region includes IPO activity in Indian and Bangladesh stock exchanges. 
    • Middle East includes Bahrain, Iran, Israel, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates and Yemen.
  • Definitions for IPO deals by sector and IPO proceeds by sector

    Sectors are classified according to Thomson general industries using a company’s Sector Industry Classification (SIC) code. There are 11 sectors, which are defined below with their specific industries. The 11 sectors are shown on the horizontal axis.

    • Consumer includes the combination of “Consumer staples” and “Consumer products and services” sectors. Its specific industries include: agriculture and livestock, food and beverage, household and personal products, textiles and apparel, tobacco, educational services, employment services, home furnishings, legal services, other consumer products, professional services, as well as travel services. 
    • Energy industries include alternative energy sources, oil and gas, other energy and power, petrochemicals, pipelines, power, as well as water and waste management.
    • Financials industries include asset management, banks, brokerage, credit institutions, diversified financials, government sponsored enterprises, insurance, as well as other financials.
    • Health and life sciences industries include biotechnology, health care equipment and supplies, health care providers and services (HMOs), hospitals, as well as pharmaceuticals.
    • Industrials industries include aerospace and defense, automobiles and components, building/construction and engineering, machinery, other industrials, transportation, as well as infrastructure.
    • Materials industries include chemicals, construction materials, containers and packaging, metals and mining, other materials, as well as paper and forest products.
    • Media and entertainment industries include advertising and marketing, broadcasting, cable, casino and gaming, hotels and lodging, motion pictures or audio visual, other media and entertainment, publishing, as well as recreation and leisure.
    • Real estate industries include non-residential, other real estate, real estate management and development, as well as residential.
    • Retail industries include apparel retailing, automotive retailing, computers and electronics retailing, discount and department store retailing, food and beverage retailing, home improvement retailing, internet and catalogue retailing, as well as other retailing.
    • Technology industries include computers and peripherals, electronics, internet software and services, IT consulting and services, other high technology, semiconductors, as well as software.
    • Telecommunications industries include other telecom, space and satellites, telecommunications equipment, telecommunications services, as well as wireless.

Previous IPO reports

Summary

The EY Global IPO Trends Q2 2023 shows emerging markets are thriving in the first half of 2023 amid a slow global IPO market. A resurgence in global IPO activity is anticipated to start in late 2023 as economic conditions and market sentiment gradually improve with the tight monetary policy entering its final stage.

About this article

By Paul Go

Asia-Pacific EY Private Assurance Leader

Leads Chinese and multinational companies in client servicing domain. Heads Hong Kong real estate, hospitality and construction sector audit group.

Contributors