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.