The curtain fell on the global IPO market for 2023, bringing forth a dynamic landscape marked by contrasts and challenges. EY’s comprehensive report, “Global IPO Trends 2023,” provides a detailed examination of the year, shedding light on the intricate tapestry of performances across regions and sectors.
In a year that saw 1,298 IPOs raising an impressive US$123.2 billion, 2023 deviated from expectations. Despite increased deal volumes in the Americas and EMEIA regions, IPO proceeds lagged behind 2022 by approximately one-third.
The market dynamics were intriguing. A robust market rally and low volatility index coexisted with subdued public offerings in developed markets. The United States experienced a fleeting IPO window in September, only to have high-profile setbacks dampen the initial enthusiasm. The dominance of mega technology stocks and the impact of aggressive monetary policies further underscored the challenges influencing IPO activity.
Regional Insights: A Tapestry of Performances
In the Americas, 153 deals raised a substantial US$22.7 billion, with over 85% of them listing on US exchanges. Despite weak IPO trading, rising interest rates, and geopolitical concerns, the region witnessed high-profile deals, notably Brazil breaking a two-year IPO drought.
The Asia-Pacific region faced economic and geopolitical headwinds, resulting in a challenging year with 732 companies going public but experiencing an 18% and 44% YoY fall in deals and proceeds, respectively. Mainland China and Hong Kong encountered declines in volume and value, reaching a 20-year low in cross-border listings.
Despite global uncertainties, the IPO market in Asean remained robust. A total of 157 deals, raising US$5.6 billion, reflected the resilience of Asean companies. Indonesia, Thailand, and Malaysia emerged as the most active exchanges, showcasing an increase in IPOs despite a YoY decrease in proceeds.
The EMEIA region experienced a 7% rise in volume, generating US$31.1 billion. However, a 39% decrease in proceeds was observed, driven by large deals from MENA, heightened activity in India and CESA, and high-profile cross-border IPOs to the US. The UK faced challenging market conditions, leading to muted IPO activity.
Sectoral Dynamics: Winners and Losers
Sector analysis revealed a nuanced picture. Industrials and consumer sectors thrived, while the technology sector faced declines, influenced by lackluster investor reception to tech IPOs. A significant downturn was witnessed in health and life sciences, particularly in Mainland China and the US, with a 78% drop in companies backed by private equity and venture capital since 2021.
Outlook for 2024
As the market anticipates an IPO revival in 2024, businesses must be prepared. Enthusiasm for IPOs remains high, and smaller deals show improved after-market performance. IPO candidates are advised to focus on building fundamentals, managing price expectations, and closely monitoring global factors, including inflation, interest rates, geopolitical tensions, and ESG agendas.
A multitrack approach is recommended, allowing companies flexibility through alternative IPO processes and various financing methods. George Chan, EY Global IPO Leader, underscores the importance of readiness, urging IPO candidates to stay vigilant in the evolving landscape where macroeconomic factors and market conditions can create opportunities for those who are well-prepared.