The global IPO market thus far this year has halved versus over this time last year as market volatility and uncertainty put many mega issues on hold in the first half of 2022.
When the current state subsides, a healthy pipeline of deals will ensue, says professional services firm EY.
“However, strong headwinds from the current uncertainties and market volatility 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 firm warns.
EY expects the technology sector 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.”
EY also notes that both investors and IPO candidates are focusing on ESG as a “sector-agnostic” theme. “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,” EY adds.
Worldwide, there were 305 IPOs in Q2 2022, down 54% y-o-y. They raised a total of US$40.6 billion, down 65% y-o-y. Year to date, the total of 630 IPOs raised US$95.4 billion, down 46% y-o-y and 58% y-o-y respectively.
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Amid the overall slump, the number of spac listings have dropped “significantly” as well. EY cites reasons such as the broader market conditions, regulatory uncertainty and increased redemptions.
A “record number” of spacs are facing a ticking clock to de-spac by next year, warns EY. “Market performance and regulatory clarity will likely drive future deal flow.”
