- Number of IPOs worldwide falls by 41 percent to 355 in third quarter, issue volume shrinks by 56 percent to CHF 50 billion compared to record year of 2021
- On the SIX Swiss Exchange, six Chinese companies complete a listing via Global Depository Receipts (GDRs) in the third quarter with an issue volume of CHF 1.8 billion
- Strongest decline in the USA: Number of IPOs falls by 69 percent, issue volume by 92 percent
- China remains stable: Number of IPOs rises by 3 percent, issue volume falls by 5 percent
Zurich, 29 September 2022 – In the face of ongoing geopolitical tensions, rising interest rates, and high volatility on the world’s stock markets, many IPO candidates remain on hold: A total of 355 companies worldwide went public in the traditionally weak third quarter – 41 percent fewer than in the third quarter of the record year 2021. The issue volume fell by 56 percent to CHF 49.9 billion.
The USA stock market was hit hardest: Compared with the third quarter of the previous year, the number of IPOs in the USA fell by 69 percent to 32, while the issue volume actually shrank by 92 percent to CHF 2.6 billion. In Europe, the number of IPOs fell by 71 percent to 30, but the volume of issues fell by only 29 percent to CHF 10.7 billion.
Significantly smaller reductions were seen on the Chinese market: In China (including Hong Kong), while issue volumes fell 5 percent in the third quarter, the number of new listings rose 3 percent to 158. China’s market share of the global IPO market thus rose sharply from 26 percent in the prior-year quarter to 45 percent.
These are the findings of the current IPO barometer published by auditing and consulting firm EY.
The third quarter from a Swiss perspective
In the third quarter of 2022, six companies completed a listing on the SIX Swiss Exchange using Global Depositary Receipts (GDRs). GDRs are tradable securities, or certificates (often called depositary receipts), issued by a bank and representing shares in foreign equities that are segregated and deposited in the home country. All six companies originate from China and achieved an issue volume of around CHF 1.85 billion. This puts Switzerland in second place for what are known as cross-border IPOs. In first place is the USA, where 31 cross-border IPOs have been completed so far in 2022. SIX has worked with the relevant Chinese authorities and the Shanghai and Shenzhen stock exchanges to develop a Stock Connect system that gives Chinese companies access to the Swiss capital market (and vice versa).
Nine companies have been newly listed on the Swiss stock exchange so far in 2022. For the year to date, SIX Swiss Exchange ranks twelfth in the world in terms of the value of completed IPOs (CHF 2.1 billion).
Recovery is a long time coming
“In the face of persistently difficult conditions, the recovery on many stock exchanges continues to be a long time coming,” said Tobias Meyer, Head of Transaction Accounting and IPO Services at EY in Switzerland. The interest rate turnaround and monetary policy tightening has put pressure on major economies, Meyer said, adding: “A possible recession, high inflation, and lingering uncertainties about energy supplies in Europe are further weighing on sentiment.” Investors are behaving with appropriate caution. With nearly 1,000 IPOs worldwide this year raising CHF 144 billion, the market is well below the previous two very strong years, but roughly on a par with 2017 to 2019.
Porsche largest IPO worldwide in the third quarter
In Germany, the only initial listing in the third quarter was the IPO of Dr. Ing. h.c. F. Porsche AG. With an issue volume of CHF 8.9 billion, the IPO is by far the world’s largest IPO in the third quarter and the second largest so far this year.
Behind the Porsche IPO, the initial listing of Chinese travel retailer China Tourism Group Duty Free Corporation was the world’s second-largest IPO of the third quarter, with an issue volume of CHF 2.3 billion – ahead of Tianqi Lithium Corporation’s IPO of CHF 1.7 billion.
Most IPOs in the third quarter were in the Technology (95) and Commodities and Industrials segments (49 each). However, the highest issue volume was recorded by the Industrials sector with CHF 12.9 billion – of which more than half was down to the Porsche IPO.
“A marked improvement in the situation on the global IPO market is currently not yet in sight,” said Meyer. “But it remains true that heavyweights, wellknown brands with high profitability, and a sustainable corporate history are attracting great investor interest, especially in the digital transformation and ESG environment.” In Switzerland, Accelleron (formerly ABB Turbocharging) is expected to list on the SIX Swiss Exchange on October 3, 2022, after ABB shareholders approved the spin-off in September. Other companies that have not yet been able to realize their IPOs due to the market situation in the first nine months of the year are waiting in the wings. Whether and how many more IPOs will be announced in the last quarter of the year depends largely on the geopolitical situation and the associated volatility of the markets.
SPAC issues continue to decline
There is not much left of the SPAC boom of 2021: After 498 SPAC transactions were recorded worldwide in the first three quarters of the previous year, the figure for the current year was only 125. In fact, there were only 17 such transactions worldwide in the third quarter of this year – compared with 106 in the same period last year. The global issue volume shrank from CHF 18.2 billion in the third quarter of 2021 to CHF 0.9 billion in the third quarter of 2022.