Global initial public offering (IPO) volumes fell 5% in the first three quarters of 2023 with proceeds down 32% year-over-year, a quarterly analysis of IPO trends by EY has revealed.
In its report, EY wrote that, despite this, market momentum is building with the third quarter seeing a “notable improvement” in post-IPO share price performance compared with the previous quarters.
They added that the global IPO market has seen shifting dynamics, with improved investor sentiment in the major Western economies and the prospect of high-profile US mega IPOs.
The report found that in the first three quarters of 2023, the Americas saw a 159% increase in proceeds year-over-year, raising US$19.3 billion.
Of 113 IPOs so far this year, 96 stemmed from the US.
The EY report noted that the technology sector continued to dominate global IPO activity in 2023 but, excluding the blockbuster IPO by chip designer Arm Holdings PLC (NASDAQ:ARM), would have registered a decline in proceeds.
They also pointed out that there has not been a substantial growth in IPO debuts for artificial intelligence (AI) startups, amid the surge in investor interest in AI stocks, but that they are beginning to emerge in the IPO pipeline.
“Unicorn IPOs” declined more than 80% in volume and proceeds year-over-year, notably in classic growth sectors such as technology, health, and life sciences.
"Faced with tighter liquidity and a higher cost of capital, investors are turning to companies with strong fundamentals and a path to profitability,” EY Global IPO leader George Chan said.
“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."
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