Home Headline News EY Global IPO Trends Q3 2023
  • Global IPO volumes fell 5%, with proceeds down by 32% nine-month YOY
  • Emerging markets made up 77% of the global share by number and 75% by value
  • YOY, unicorn IPOs suffered a significant decline of more than 80% in volume and proceeds

Globally, the first three quarters of 2023 recorded 968 IPOs with US$101.2b capital raised, a 5% and 32% decrease year-over-year (YOY), respectively. Despite this, market momentum is building, with Q3 having witnessed a notable improvement in post-IPO share price performance compared with previous quarters. Three quarters into 2023, the global IPO market has seen shifting dynamics featuring improved market sentiment in major Western countries, the prospect of high-profile US IPOs, robust emerging markets and a cooling China IPO market. These and other findings are available in the EY Global IPO Trends Q3 2023.

In the past decade, IPO numbers and proceeds from emerging markets have both increased by more than 30%, primarily due to faster economic growth compared to developed countries. Until this point of 2023, emerging markets accounted for 77% of the global share by number and 75% by value. They embraced new entrants to the active IPO arena, such as Turkey and Romania, in addition to the already thriving countries like Indonesia, Malaysia and India. In developed markets, the US witnessed a higher number of larger deals, while Japan and Italy contributed to the growth of smaller deals.

The technology sector continues to dominate global IPO activity in 2023. However, if excluding the blockbuster chip designer IPO, the entire sector would register a decline in proceeds. There hasn’t been substantial growth in IPO debuts for artificial intelligence (AI) startups, but they are beginning to emerge in the IPO pipeline. Industrials moved into the second spot amid solid expansion across most of its subsectors. Unicorn IPOs, on the other hand, have experienced a substantial decrease in volume and proceeds of more than 80% YOY, notably in classic growth sectors such as technology, and health and life sciences.

Overall regional performance: post-IPO share price has improved across regions

The Americas region saw an outstanding 159% increase in proceeds, raising US$19.3b, YOY for the initial three quarters of 2023. Out of the 113 IPOs this year, 96 of them stemmed from the US. The US is also the only market that has attracted more cross-border IPOs and is welcoming long-awaited blockbuster IPOs. Special purpose acquisition company (SPAC) IPO activity thus far in 2023 has hit a seven-year low in terms of proceeds, and is down to levels not seen since in 2016. While the traditional IPO market show signs of recovery, SPAC IPO activity is likely to be muted in the near term as the focus shifts to completing or unwinding those yet to de-SPAC.

The initial nine months of 2023 present a mixed picture for Asia-Pacific IPOs, with volume and proceeds down YOY by 8% and 41%, respectively, even though the region presents an approximate 60% share of global market share. Governments across most of the region are trying hard to stimulate economic growth and IPO activity through initiatives such as reducing stamp duty taxes. Also, due to softness in key markets, Asia-Pacific saw fewer deals the past two years. There is general optimism over large deals in the pipeline, with an expected modest uptick in IPOs next quarter or early 2024.

Since the start of the year, EMEIA saw 286 IPOs, which raised US$21.9b, a YOY increase of 2% in volume but a 44% reduction in proceeds. EMEIA-based stock markets have adapted to a “new normal” amid tightening in financial conditions and market liquidity, yet stayed surprisingly robust and stable, with investors displaying increased confidence. A distinct trend in EMEIA is the growing interest in IPOs in the energy sector, along with environmental, social and governance (ESG) -related equity stories. 

Q4 2023 outlook: new interest rate environment

George Chan, EY Global IPO Leader, says:

“Faced with tighter liquidity and a higher cost of capital, investors are turning to companies with strong fundamentals and a path to profitability. In response, IPO prospects need to demonstrate their financial health and potential for value creation. As valuation gaps narrow, investors are reviewing the post-listing performance of the new cohort of IPOs, which, if positive, could renew market confidence.”

Across major Western economies, interest rates are forecast to stay high, as central banks try to bring persistent inflation down to target levels. Consequently, the cost of capital remains elevated, which, along with tighter credit, makes financing more challenging. 

Investors will continue to care more about the fundamentals such as a strong balance sheet, healthy cash flows and resilience amid weak economic conditions rather than how fast the company can grow and how high the valuation could reach. Investors are also likely to be more interested in companies with an ESG concept and those that can demonstrate the adoption of AI application into the business models and operations.

IPO candidates will need to be agile with innovative business models, be resilient when facing supply chain constraints and macroeconomic challenges, have strong working capital and be able to adapt to new ways of doing business by embracing technology and AI applications.

You may also like


Your Trusted Source for Capital Markets & Related News

© 2023 LiveTradingNews.com – For The Traders, By The Traders – All Right Reserved.

The information contained on this website shall not be construed as (i) an offer to purchase or sell, or the solicitation of an offer to purchase or sell, any securities or services, (ii) investment, legal, business or tax advice or an offer to provide such advice, or (iii) a basis for making any investment decision. An offering may only be made upon a qualified investor’s receipt not via this website of formal materials from the Knightsbridge an offering memorandum and subscription documentation (“offering materials”). In the case of any inconsistency between the information on this website and any such offering materials, the offering materials shall control. Securities shall not be offered or sold in any jurisdiction in which such offer or sale would be unlawful unless the requirements of the applicable laws of such jurisdiction have been satisfied. Any decision to invest in securities must be based solely upon the information set forth in the applicable offering materials, which should be read carefully by qualified investors prior to investing. An investment with Knightsbridge is not suitable or desirable for all investors; investors may lose all or a portion of the capital invested. Investors may be required to bear the financial risks of an investment for an indefinite period of time. Qualified investors are urged to consult with their own legal, financial and tax advisors before making any investment. Knightsbridge is a private investment firm that offers investment services to Qualified Investors, Members and Institutions ONLY. Qualified Investors are defined as individuals who have met those Qualifications in the relevant jurisdictions. Members are defined as individuals who have been accepted into the Knightsbridge membership program. Institutions are defined as entities such as banks, pension funds, and hedge funds. If you are not a Qualified Investor, Member or Institution, you are not eligible to invest with Knightsbridge. All investments involve risk, and there is no guarantee of profit. You may lose some or all of your investment. Past performance is not indicative of future results. Knightsbridge is not a registered investment advisor, and this disclaimer should not be construed as investment advice. Please consult with a qualified financial advisor before making any investment decisions. By accessing this website, you agree to the terms of this disclaimer. Thank you for your interest in Knightsbridge.