- IPO activity in Q3 at around prior-year level with 350 IPOs, issue volume of around 38.4 billion US dollars
- USA with increased issue volume due to biggest technology IPO of the year (ARM)
- Companies in the technology sector and with sustainable business models remain in the focus of investors
- Swiss stock exchange SIX lists one Chinese company in the third quarter
Zurich, 3 October 2023 – In the third quarter of 2023, 350 companies went public worldwide - a slight decline of six percent compared with the same quarter of the previous year (371). Issue volume shrank by 27 percent to USD 38.4 billion.
Developments in the third quarter were mixed across the major economic areas: the USA recorded 33 IPOs (+14 percent) with an issue volume of USD 8.6 billion (USD 2.5 billion in Q3 2022). China achieved only 105 IPOs (-33 percent year-on-year) with an issue volume of US$16.8 billion; European exchanges saw a total of 40 companies list (-5 percent) with an issue volume of US$5.6 billion (-53 percent).
These are the results of the latest IPO barometer of the audit and consulting firm EY in Switzerland.
IPOs in Switzerland – one Chinese company with listing on SIX
There were again no IPOs in Switzerland in the third quarter of the current year. However, another GDR (Global Depository Receipt) listing was registered. This was completed by the Chinese company Zhejiang Huayou Cobalt Co Ltd and, with a volume of $582.5 million, ranks fourth among the largest IPOs in Europe during the third quarter. The three largest IPOs in Europe were completed by the following companies: Hidroelectrica SA ($2,049.2), SCHOTT Pharma AG & Co KGaA ($856.0) and Thyssenkrupp Nucera AG & Co KGaA ($658.2).
Already in the second quarter of 2023, there were no actual IPOs on the SIX Swiss Exchange, but there were three GDR listings. The three companies from China recorded a combined volume of around 791 million Swiss francs. Zhejiang Supcon Technology Co Ltd, Yangzhou Yangjie Electronic Technology Co Ltd and Kunshan Dongwei Technology Co Ltd were the three companies to have their depositary receipts listed on SIX Swiss Exchange. In the first quarter of 2023, two Chinese companies went public on the Swiss Exchange via GDR. Thus, a total of 6 GDR listings of Chinese companies were completed on SIX in the first three quarters of the current year.
In the fourth quarter of the current year, the Swiss IPO market is expected to show increased dy-namics. The reason for this is not least the IPO of its generics division Sandoz announced by Novartis for October 4, 2023. After the spin-off from Novartis, the generics manufacturer will be included in the SLI and SPI indices, among others.
Technology sector dominates the IPO market
Of the global issue volume of USD 38.4 billion in the third quarter of 2023, around 40 percent was attributable to the technology sector. The listing of the British technology company Arm Holding plc in the past quarter was the largest IPO of the year in the USA; the issue volume was 5.2 billion US dollars. Schott and Nucera, two German companies, were the second and third largest IPOs in Europe in the third quarter; in the global ranking, these two transactions ranked sixth and ninth.
"Compared to the first half of the year, sentiment improved in the third quarter. The main drivers were declining volatility, recovered valuation levels and the emerging end of the ECB and Fed rate hike cycle, while at the same time the Swiss National Bank refrained from a further rate hike," says Tobias Meyer, Head of Transaction Accounting and IPO Services at EY in Switzerland. "Despite remaining uncertainties, investors have more confidence in the robustness of equity markets and are again investing in high-quality IPOs with a compelling equity story with sustainable business models and value creation potential."
"The caution observed in the first half of the year has faded, despite external shocks that continue to occur and ongoing geopolitical tensions. While the major economies' indices are stagnant, they remain at high levels," Meyer continues.
"I remain cautiously optimistic for the remainder of the year, or rather for the first half of 2024, provided that the macroeconomic conditions described above do not change. The successful IPOs of ARM, Nucera and Schott are catalysts and fuel for more IPO activity in the fourth quarter, and the spinoff of Sandoz in Switzerland could also have a positive signal effect. As in the past quarter, the technology sector as well as energy and ESG-related equity stories are likely to have the best prospects for success. There are enough suitable candidates."
