How do you prepare for when the time is right?

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.

3 minute read 28 Sep 2022

The global IPO market continues to plummet as Q3 draws to a close.

In brief
  • Global IPO volumes fell 44%, with proceeds down by 57% nine-month year-over-year.
  • The US market is set to record its lowest proceeds since 2003.
  • Highest volume of IPOs is in technology and energy sector now leading on proceeds.

Year-to-date (YTD) 2022, there have been a total of 992 IPOs raising US$146b, a 44% and 57% decrease year-over-year (YOY), respectively. This follows the trend for the year in which IPO companies and investors were faced with mounting macroeconomic challenges, market uncertainties, increasing volatility and falling global equity prices. Volatility (CBOE VIX average) increased from 19.7 in 2021 to 25.6 in YTD 2022.

YTD, the technology sector continued to lead by number of IPOs, although the average deal size came down from US$261m to US$123m YOY. While the energy sector overtook by proceeds with the largest increase of 176%, driven largely by three of the global top five deals in YTD 2022, the consumer products sector witnessed the biggest drop in average deal size (69%).

Q3 2022 saw the lowest Special Purpose Acquisition Company (SPAC) IPO proceeds since Q3 2016, along with de-SPACs struggling to find the right targets. The SPAC market was continually challenged this quarter, with only 17 deals raising US$0.9b. A record number of existing SPACs are actively seeking targets, with the majority facing potential expiration in the next year.

Overall regional performance: taking a wait-and-see approach

Major economies and financial markets in the Americas and EMEIA remain under pressure as quantitative tightening kicks into a higher gear. 

Americas exchanges saw the sharpest decline, recording only 116 deals raising US$7.5b YTD, a decrease of 94% in proceeds and 72% in volume YOY. In direct contrast to a record-breaking year in 2021, YTD Americas IPO activity sank to its lowest level in 20 years.

YOY, EMEIA IPO activity fell by 50% and 52% by number and proceeds, respectively. Europe dropped 76% in proceeds, but the Middle East continued to be a rare bright spot with a 209% increase in proceeds, despite a 51% decrease in the number of deals.

As the region has been less impacted by inflation and geopolitical issues, Asia-Pacific exchanges have performed relatively better, housing five of the top 10 global IPOs in YTD. YTD it has also contributed 61% and 69% of the global share of IPOs and proceeds, respectively. However, it still registered YOY declines of 25% by deal number and 22% by deal size. 

EY IPO Q3 2022 Charts

Paul Go, EY Global IPO Leader, says: “With uncertainties being the IPO market’s biggest challenge, companies and investors continue to wait for a more stable and positive stock market sentiment before any sustained appetite for IPO activity re-emerges.” 

Q4 2022 outlook: icebreakers will pave the way

Soaring inflation and rising interest rates are adversely affecting the global equity market. Geopolitical tensions and the COVID-19 pandemic led to more market uncertainty and volatility. All these factors are bringing headwinds for risk assets as we near the end of 2022.

In the Americas, IPO pipelines are waiting for the market to reopen next year, and in EMEIA, tough market conditions continue to squeeze IPO windows. For APAC, while public filings for IPOs have not picked up, activity remains strong in the background as companies evaluate their options for 2023. 

Go says: “Many companies’ IPO plans were put on ice in early 2022, in anticipation of more favorable market conditions. Providing the market uncertainties and volatility can subside, the launch of long-awaited blockbuster IPOs together with improved after-market returns may reverse the sentiment and attract more companies to follow."

Overall, IPO candidates looking to go public will need to be well prepared when re-engaging the market as they will face much lower valuations compared with the highs of 2021.

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  • Data definitions for all charts

    The data presented on this webpage and in the EY Global IPO press release Q3 2022 is from Dealogic and EY analysis. Q3 2022 (i.e., 1 July – 31 September 2022) and YTD 2022 (1 January – 31 September 2022) are based on completed IPOs as of 21 September 2022 (i.e., IPOs that have started trading by 21 September 2022) and expected IPOs in September. Data is up to COB 21 September 2022. 

    • 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.
    • 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

    • ASX: Australian Securities Exchange
    • BSE: Beijing stock exchange
    • HKEx: Hong Kong Stock Exchange Main Board and its junior market, Growth Enterprise Markets (GEM)
    • IDX: Indonesia Exchange
    • KLSE: Bursa Malaysia, ACE Market and LEAP Market
    • KRX: Korea Stock Exchange and its junior market, KOSDAQ
    • SSE: Shanghai Stock Exchange and Science and Technology Innovation Board (STAR)
    • SZSE: Shenzhen Stock Exchange and junior market ChiNext
    • TSE: Tokyo Stock Exchange (Prime, Standard, Growth), REIT and PRO markets

    Europe, Middle East, India and Africa

    • ADX: Abu Dhabi Stock Exchange
    • BIST: Borsa Istanbul 
    • DFM: Dubai Financial Market
    • FRA: Deutsche Borse
    • 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 Copenhagen, Helsinki, Stockholm and Riga
    • OB: Oslo Bors and Axess
    • SIX: SIX Swiss Exchange
    • TADAWUL: 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.

Previous IPO reports

Summary

The EY Global IPO Trends Q3 2022 highlights the continued decline of the global IPO market from the previous quarter. Many IPOs continue to be postponed due to volatility caused by macroeconomic challenges, market uncertainties, increasing volatility and falling global equity prices.

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.