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Summary of EY Global IPO Trends Q2 2022

Core Content

The EY Global IPO Trends Q2 2022 report highlights a significant decline in global IPO activity compared to 2021, driven by increased market volatility, geopolitical tensions, unfavorable macroeconomic factors, and weakening stock valuations. Investors are becoming more selective, focusing on companies with resilient business models and profitable growth, while embedding ESG (Environmental, Social, and Governance) as part of their core values.

Main Points

Global IPO Activity

• Q2 2022:
  • Number of IPOs: 305 (down 54% from Q2 2021)
  • Proceeds: US$40.6b (down 65% from Q2 2021)
• YTD 2022:
  • Number of IPOs: 630 (down 46% from YTD 2021)
  • Proceeds: US$95.4b (down 58% from YTD 2021)

Regional Analysis

• Americas:
  • Q2 2022: 41 IPOs (down 73%), US$2.5b proceeds (down 95%)
  • YTD 2022: 77 IPOs (down 73%), US$5.0b proceeds (down 95%)
  • US and Canada experienced a notable slowdown, while Brazil and Mexico had no IPOs.
• Asia-Pacific:
  • Q2 2022: 181 IPOs (down 37%), US$23.3b proceeds (down 42%)
  • YTD 2022: 367 IPOs (down 28%), US$66.0b proceeds (down 14%)
  • The region performed relatively better than the global average, with the two largest global IPOs in the first half of 2022.
  • Middle East and India were rare bright spots.
• EMEIA (Europe, Middle East, India and Africa):
  • Q2 2022: 83 IPOs (down 62%), US$14.8b proceeds (down 44%)
  • YTD 2022: 186 IPOs (down 50%), US$24.4b proceeds (down 57%)
  • The Middle East and North Africa (MENA) region saw a significant rise in proceeds due to two mega IPOs.
  • India was the only region to witness a YOY increase in IPO activity, both by number of deals (18%) and proceeds (19%).

Cross-Border Activity

• Cross-border IPO activity dropped by 63% from 99 in YTD 2021 to 37 in YTD 2022.
• The US remained the top cross-border destination, with 22 IPOs raising US$1.2b in YTD 2022.
• The number of cross-border IPOs in the first half of 2022 was lower than the second half of 2021, indicating a slowdown in global cross-border activity.

Sector Trends

• Energy was the top sector for IPOs in terms of proceeds, with four of the top 10 global IPOs.
• Technology and Health and Life Sciences also had notable IPO activity, but the sector saw a significant drop in the number of IPOs and proceeds compared to 2021.
• Financials and Industrials were also active sectors.

Market Outlook

• The global IPO market is expected to remain subdued in the short term, with increased volatility and uncertainty.
• However, positive economic developments and new policies in China, along with potential easing of geopolitical tensions, could revive IPO activity in the Asia-Pacific region.
• In the Middle East and North Africa, the strong IPO pipeline and support from secondary markets are expected to continue.
• In the Americas, the IPO market is expected to remain weak due to macroeconomic headwinds, but companies with strong fundamentals may see a rebound once conditions improve.

Key Information

• Market Volatility: Increased due to geopolitical tensions, inflation, rising interest rates, and supply chain disruptions.
• ESG Focus: Investors are prioritizing companies that demonstrate strong ESG practices.
• IPO Performance: Most IPOs from 2021 are trading below their offer price, which has deterred investor appetite.
• Mega IPOs: The number of mega IPOs (IPO proceeds > US$1b) dropped by 75% from 44 in YTD 2021 to 11 in YTD 2022.
• Unicorn IPOs: The number of unicorn IPOs (companies valued over US$1b) dropped by 93% from 54 in YTD 2021 to 4 in YTD 2022.
• IPO Activity in 2022:
  • Global: 630 IPOs, US$95.4b proceeds
  • Americas: 77 IPOs, US$5.0b proceeds
  • Asia-Pacific: 367 IPOs, US$66.0b proceeds
  • EMEIA: 186 IPOs, US$24.4b proceeds

Conclusion

The global IPO market experienced a sharp decline in Q2 2022 and YTD 2022, primarily due to market volatility, geopolitical tensions, and macroeconomic headwinds. However, the report suggests that the market may rebound in the latter half of 2022, particularly in regions like China, India, and the Middle East, which showed signs of resilience and positive development. Investors are increasingly selective, focusing on companies with strong fundamentals and ESG integration.