After record-high levels of global IPO activity in 2021, volatile market conditions have resulted in a significant slowdown during the first quarter of 2022. The year started off strongly, continuing the momentum of Q4 2021, with January producing the strongest opening month in 21 years by proceeds. However, by the second half of the quarter, worldwide stock market declines shifted the trajectory dramatically in the opposite direction, resulting in a significant drop in overall activity. For Q1 2022, the global IPO market saw 321 deals raising US$54.4b in proceeds, a decrease of 37% and 51% YOY, respectively.
The sudden reversal can be attributed to a range of issues, both emerging and residual. These include the rise in geopolitical tensions; stock market volatility; price correction in over-valued stocks from recent IPOs; growing concerns about a rise in commodity and energy prices; impact of inflation and potential interest rate hikes; as well as the COVID-19 pandemic risk continuing to hold back a full global economic recovery.
In line with the sharp decline in global IPO activity there was a considerable fall in cross-border, unicorn, mega (proceeds above US$1b) and SPAC IPOs. There were also a number of IPO launches postponed due to market uncertainty and instability.
Overall regional performance
IPO activity in the Americas region completed 37 deals in Q1 2022 raising US$2.4b in proceeds, a decline of 72% in the number of deals and a 95% fall in proceeds YOY. The Asia-Pacific region recorded 188 IPOs raising US$42.7b in proceeds, a decline YOY of 16% for volume, but an increase of 18% in proceeds. EMEIA market IPO activity in Q1 2022 reported 96 deals and raised US$9.3b in proceeds, a decline YOY of 38% and 68%, respectively.
Shift in sector performance
The first quarter saw some slight shifts in sector performance partly due to the changing economic environment and market conditions. Both the technology and materials sectors led by number of IPOs with 58 each, raising US$9.9b and US$5.9b, respectively. This was followed by industrials (57 IPOs raising US$5b). Technology continued its dominance by deal numbers for the seventh consecutive quarter (since Q3 2020) but ranked second by proceeds – breaking a streak of seven consecutive quarters raising the highest IPO proceeds since Q2 2020.
In Q1 2022, energy led in terms of proceeds (US$12.2b via 15 IPOs), driven by Q1’s largest IPO on the Korea Exchange, while telecommunications came third (US$8.6b via six IPOs) due to Q1’s second largest IPO on the Shanghai Stock Exchange.
For additional insight on IPO activity in the Americas, Asia-Pacific and EMEIA, as well as a Q2 2022 outlook, read the EY Global IPO Trends Q1 2022 press release.