December 15, 2023
(press release)
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The Global IPO market closed 2023 with 1,298 IPO raising US$123.2b. Overall the global IPO market in 2023 has experienced shifting landscapes with improved Western market sentiment counterbalanced by China's cool-down, as well as a contrast between hot developing market small-cap deals and lackluster large offerings. When comparing to 2022, IPO proceeds in 2023 lagged last year’s tepid pace by roughly a third, although deal volumes have picked up in both the Americas and EMEIA regions. These and other findings are available in the EY Global IPO Trends 2023. Despite a strong market rally and low volatility index on the back of positive economic data, public offerings have remained subdued in many developed markets, with the exception of a brief September window in the US. After two years of muted listings, IPO issuers and investors were keen to take the ride of a market upswing, but this enthusiasm dampened after September when high-profile IPOs sank underwater, impacting market sentiment. Equity investor fixation on mega technology stocks in the face of macro uncertainty also left less appetite for new listings. Extraordinarily aggressive monetary policies were another major factor affecting IPO activity, superseding the influence of overall stock market performance. Benchmarking against five-year average IPO activity, highlights include Indonesia, Malaysia and Turkey notching increases in deal volume and proceeds. Meanwhile India, Saudi Arabia and Thailand recorded an increase in the number of IPOs vs. five-year average. In contrast, Hong Kong’s IPO market experienced a 20-year low in proceeds this year, and the pace of IPO issuance in Mainland China slowed in the latter half of 2023. The industrials and consumer sectors had positive movement this year, with industrials having the most deals and consumer being the only sector to increase by both IPO volume and proceeds. In contrast, the technology sector continued to experience declines driven by underwhelming investor reception to high-profile tech IPOs in the US and generative artificial intelligence (GenAI) startups still being in the venture capital stage. Despite this, technology IPOs still led the pack for proceeds for 2023. There has also been a significant downturn in IPO volume and proceeds within the health and life sciences sector – particularly in Mainland China and the US. The number of companies backed by private equity and venture capital within this sector plummeted by 78% since 2021. Sector IPO trends reflect shifting global economic and supply chain dynamics, which bring new winners and losers across sectors – although strong fundamentals still win out overall. While the number of Americas IPOs in 2023 was up 15% compared with 2022, proceeds jumped nearly three times that of 2022 due to several high-profile deals. In total, 153 deals raised US$22.7b, with over 85% of them listing on US exchanges. The region had seven deals that raised over US$500m in 2023 vs. just four in 2022, but smaller deals continue to dominate IPO activity on US exchanges. Brazil’s IPO market surpassed a two-year absence of listings amid global instabilities, marking the most prolonged drought in over two decades. In Canada, its main exchange featured only one IPO each in 2022 and 2023 – this level of IPO activity is unprecedented on this exchange over the last two decades. Overall in the Americas, weak IPO trading performance, rising interest rates and geopolitical concerns have contributed to challenging capital raising conditions for companies seeking to access the public markets. This year, 732 companies went public in Asia-Pacific raising US$69.4b, a YOY fall of 18% and 44% respectively. Facing economic and geopolitical headwinds, 2023 was challenging for Asia-Pacific’s IPO markets, with the two powerhouses of Mainland China and Hong Kong continuing to decline in volume and value. The average deal size of cross-border listings from Mainland China to the US also fell to its lowest level in 20 years, with a 93% drop from its 2021 levels. However, Mainland China remained a vital source of IPO funding, contributing over 40% of global proceeds in 2023. In the Asia-Pacific IPO market, well-capitalized companies backed by private equity and venture capital in the environmental, social and governance (ESG) and technology spaces have the capital to wait out until valuation improves. Realistic pricing and post-IPO performance may encourage some of these companies that are prepared for IPO with strong governance and a good equity story to list in 2024. The EMEIA IPO market is on its path to recovery, with a 7% rise in volume, even with a 39% decrease in proceeds, on the back of large deals from MENA, heightened activity in India and CESA, as well as a few high-profile cross-border IPOs to the US. This region rounded out the year with 413 deals, raising US$31.1b. And, even though 5 of the world’s largest 10 deals were from EMEIA, the region had a greater number of smaller IPOs than large ones compared with 2022, hence the fall in total proceeds. MENA continued to dominate the top 10 EMEIA IPOs in 2023, accounting for 6 of those IPOs. In the UK, challenging market conditions, compounded by high inflation and elevated interest rates, have muted IPO activity. Overall in EMEIA, the outlook for 2024 is optimistic but cautious, given an unpredictable market environment. In various countries, governments and regulators are taking steps to stimulate capital markets to boost investment in disruptive innovation. George Chan, EY Global IPO Leader, says: “Enthusiasm for IPOs is high and smaller deals are emerging with improved after-market performance. While many governments are taking measures to boost IPOs, activity is particularly strong in high-growth economies. Before monetary policy eases and geopolitical climate stabilizes, IPO-bound companies should keep their eyes on building fundamentals and managing price expectations to capitalize on the fleeting windows as 2024 progresses.” Globally, moderating inflation and potential 2024 interest rate cuts could attract investors back to IPOs by improving liquidity and return outlooks. However, sustained geopolitical instability may undermine confidence. Broadly, the year ahead hinges on improving macro backdrop for an IPO revival as companies eagerly await more favorable market conditions to widen the IPO windows. When headwinds abate, confidence may rebound and markets will present opportunities for IPOs again. IPO candidates looking to go public in 2024 will need to be well-prepared. Key factors to consider are: inflation and interest rate, government policies and regulations, recovery of economic activities, geopolitical tensions and conflicts, ESG agenda, and global supply chain. Multitrack options should also be considered, from alternative IPO processes (direct listing or dual and secondary listings) to other financing methods (private capital, debt or trade sale). -ends- EY exists to build a better working world, helping to create long-term value for clients, people and society and build trust in the capital markets. Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate. Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com. This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients. As Advisors to the ambitious™, EY Private professionals possess the experience and passion to support private businesses and their owners in unlocking the full potential of their ambitions. EY Private teams offer distinct insights born from the long EY history of working with business owners and entrepreneurs. These teams support the full spectrum of private enterprises including private capital managers and investors and the portfolio businesses they fund, business owners, family businesses, family offices and entrepreneurs. Visit ey.com/private. Going public is a transformative milestone in an organization’s journey. As the industry-leading advisor in initial public offering (IPO) services, EY teams advise ambitious organizations around the world and helps equip them for IPO success. EY teams serve as trusted business advisors guiding companies from start to completion, strategically positioning businesses to achieve their goals over short windows of opportunity and preparing companies for their next chapter in the public eye. ey.com/ipo The data presented here is available on ey.com/ipo/trends. 2023 refers to the full calendar year and covers completed IPOs from 1 January 2023 to 4 December 2023, plus expected IPOs by 31 December 2023 (forecasted as of 4 December 2023). All data contained in this document is sourced from Dealogic, Capital IQ and Wind, and EY analysis unless otherwise noted. The Dealogic data in this report are under license by ION. ION retains and reserves all rights in such data. SPAC data are excluded from all data in this report, except where indicated. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. EY | Assurance | Consulting | Strategy and Transactions | Tax About EY EY is a global leader in assurance, consulting, strategy and transactions, and tax services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. © EYGM Limited. All Rights Reserved. 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Overall regional performance: 2023 wasn’t the year the regions thought it would be
2024 outlook: Candidates must be prepared
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