How can you find the clarity to steer your growth?

By Paul Go

EY Global IPO Leader; 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.

5 minute read 29 Jun 2022

The global IPO market witnessed a dramatic slowdown in YTD 2022 following a record year in 2021.

In brief
  • Global IPO volumes fell 46%, with proceeds down by 58% 1H year-over-year.
  • With global activity almost halved in YTD 2022, the Americas market recorded the biggest decline.
  • Middle East and India were some of the rare bright spots amidst a bearish market.

IPO momentum continued to slow from Q1 into Q2, resulting in a considerable decline in both deal numbers and proceeds. Heightened volatility caused by geopolitical tensions and macroeconomic factors, declining valuation and poor post-IPO share price performance led to the postponement of many IPOs during the quarter. The dramatic slowdown in IPO activity in YTD 2022 after a record year in 2021 was experienced across most major markets.

For Q2 2022, the global IPO market saw 305 deals raising US$40.6b in proceeds, a decrease of 54% and 65%, respectively, year-over-year (YOY). Through YTD 2022, there were a total of 630 IPOs raising US$95.4b in proceeds, reflecting decreases of 46% and 58%, respectively, YOY.

The 10 largest IPOs by proceeds raised US$40b, with energy dominating three of the top four deals, replacing the technology sector as the top IPO fund raiser. The technology sector continued to lead by number, but the average IPO deal size came down from US$293m to US$137m, whereas energy has overtaken to lead by proceeds with average deal size increasing from US$191m to US$680m YOY.

Special purpose acquisition company (SPAC) IPOs are significantly down in line with traditional IPO activity despite new markets joining. The SPAC market has been challenged this year as a result of broader market conditions, regulatory uncertainty and increased redemptions. A record number of existing SPACs are actively seeking targets with the majority of them facing potential expiration in the next year. However, market performance and regulatory clarity will likely drive future deal flow. 

In line with the sharp decline in global IPO activity, there was a sizable fall in cross-border activity affected by geopolitical pressures and government policies on overseas listings. These and other findings were published in the EY Global IPO Trends Q2 2022 (pdf).

IPO FY 2022 Q2

Download the EY Global IPO Trends Q2 2022

Read the full report for additional insights including area-specific information, sector insights and more.

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Overall regional performance: investors are refocusing on fundamentals

The Americas region completed 41 deals in Q2 2022, raising US$2.5b in proceeds, a decline of 73% in the number of deals and a 95% fall in proceeds YOY. The Asia-Pacific region recorded 181 IPOs, raising US$23.3b in proceeds in Q2, a decline YOY of 37% for volume and 42% in proceeds. EMEIA market IPO activity in Q2 2022 reported 83 deals and raised US$14.8b in proceeds, a YOY decline of 62% and 44%, respectively. 

Given the tightened market liquidity and significant decline in stock prices of many new economy companies that went public during the last two years, investors are becoming more selective and are refocusing on the companies’ fundamentals instead of just “growth” stories and projections; e.g., sustainable profits and free cash flows.

Paul Go, EY Global IPO Leader, says:
“Investors are refocusing on companies with resilient business models and profitable growth, while embedding ESG in their core business values.”

Q3 2022 outlook: uncertainties and volatility are likely to remain

There were many mega IPOs postponed in the first half of 2022, which represent a healthy pipeline of deals that are likely to come to the market when the current uncertainties and volatility subside. However, strong headwinds are likely to remain. These include geopolitical strains, macroeconomic factors, weak capital market performance and the impact from the lingering pandemic on global travel and related sectors.

The technology sector is likely to continue as the leading sector in terms of the number of deals coming to the market. However, with greater focus on renewable sources of energy in the face of increasing oil prices, the energy sector is expected to continue to lead by proceeds from bigger deals.

ESG will continue to be a sector-agnostic key theme for investors and IPO candidates. As global climate change and energy supply constraints intensify, companies that have embedded ESG into their core business values and operations should attract more investors and higher valuation.

Investors are refocusing on companies with resilient business models and profitable growth, while embedding ESG in their core business values
Paul Go
EY Global IPO Leader

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  • Data definitions for all charts

    The data presented on this webpage and in the EY Global IPO press release: YTD 2022 is from Dealogic and EY. Q2 2022 (i.e., April-June) and YTD 2022 (January-June) are based on completed IPOs as of 14 June 2022 and expected IPOs in June (i.e., expected to start trading by 30 June). Data is up to COB 14 June.

    • 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 as well as 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.
    • Middle East includes Bahrain, Iran, Israel, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates and Yemen.
  • Definitions for IPO deals — top stock exchanges

    We have used data from the main market and the junior market if applicable. The labels on the horizontal axis are the stock exchange tickers (see below for their full names):

    Asia-Pacific

    • HKEx: Hong Kong Stock Exchange Main Board and its junior market, Growth Enterprise Markets (GEM)
    • IDX: Indonesia Exchange
    • KRX: Korea Stock Exchange and its junior market, KOSDAQ
    • SZSE: Shenzhen Stock Exchange and junior market ChiNext
    • SSE: Shanghai Stock Exchange and Science and Technology Innovation Board (STAR)
    • BSE: Beijing Stock Exchange
    • ASX: Australian Securities Exchange
    • TSE: Tokyo Stock Exchange (Prime, Standard, Growth sections)

    Europe, Middle East, India and Africa

    • ADX: Abu Dhabi Stock Exchange
    • DFM: Dubai Financial Market
    • Indian: India’s National Stock Exchange and junior market, Small and Medium Enterprise (SME) board and Bombay Stock Exchange and junior market SME board
    • Italia: Borsa Italiana Main Market and junior market
    • NASDAQ OMX: NASDAQ OMX Nordics Main Market and First North, based in Denmark, Finland, Sweden, Iceland and Estonia
    • OB: Oslo Bors and Axess
    • Saudi: Saudi Main Market and Nomu Parallel Market
    • TASE: Israel’s Tel Aviv Stock Exchange

    Americas

    • NASDAQ: US’s National Association of Securities Dealers Automated Quotations exchange
    • NYSE: US’s New York Stock Exchange
  • 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.
    • Financial industries include asset management, banks, brokerage, credit institutions, diversified financials, government sponsored enterprises, insurance, as well as other financials.
    • Health care 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.

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Summary

The EY Global IPO Trends Q2 2022 highlights the continued decline of the global IPO market from the previous quarter. Many IPOs were postponed during the quarter due to increased volatility caused by geopolitical tensions and macroeconomic variables, declining valuation, and poor post-IPO share price performance.

About this article

By Paul Go

EY Global IPO Leader; 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.