A resurgence of global initial public offering (IPO) activity is expected in late 2023 as economic conditions and market sentiment improve, according to a new report from professional services firm Ernst & Young (EY).
In its quarterly global IPO trends report, EY wrote that large corporate spin-offs and carve-out listings will likely surface across major markets following a mega spin-off IPO debut in the US that outshone all other traditional IPOs during 2Q.
Looking back at IPO activity during the second quarter, the firm noted that in the year to date there have been 615 IPOs, down 5% when compared to the same time in 2022.
A total of US$60.9 billion has been raised so far this year, down 36% year-over-year.
EY highlighted that some emerging markets such as India and Indonesia have boomed with IPO activities as the result of demand for mineral resources, their vast population, and growing small and medium-sized enterprises.
Technology is the leading sector for IPO activity to date in 2023, while IPO proceeds in the energy sector have shrunk on falling global energy prices.
"Certain theme-centric sectors such as technology and clean energy are signaling an upswing in IPO activity,” commented EY Global IPO leader Paul Go.
“Large, well-established companies are demonstrating enduring resilience, while growth narratives with more realistic and acceptable valuation are becoming more receptive by the market. In this shifting environment, companies need to prepare now to be 'IPO-ready' for any forthcoming windows."
IPO performance by region
While the number of IPOs remained flat, the Americas region saw an 86% year-over-year increase in proceeds, raising US$9.1 billion, according to EY's report.
The firm attributed this growth to the aforementioned mega spin-off, which represented the largest US IPO since November 2021.
Despite the uptick in large deals and improvements in market sentiment, EY cautioned that it may take the Americas IPO market longer to recover than previously forecast due to the banking crisis spurred by the collapse of Silicon Valley Bank.
Meanwhile, the Asia-Pacific IPO market remains the global leader in IPO volume and value with an approximate 60% share, EY noted in its report.
The number of IPOs was down 2% year-over-year at 371 and raised gross proceeds of US$39.4 billion, a 40% decrease from 2022.
Proceeds took a hit from a cooler-than-expected Mainland China IPO market, with many large IPOs put off, EY noted.
In Europe, the Middle East, India, and Africa (EMEIA), IPO activity continues to shrink. Listings were down 12% year-over-year at 167, raising proceeds of US$12.4 billion, a 50% drop.
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