EY: The global public offering market slowed in the first quarter of 2022

Following the historically high performance of the global public offering market in 2021, volatile market conditions led to a significant slowdown in the first quarter of 2022. The year began dynamically, continuing the course of the fourth quarter of 2021, with January appearing as the strongest first month of the last 21 years, in terms of revenue. However, by the second half of the quarter, declining stock markets worldwide had resulted in a significant decline in overall activity. For the first quarter of 2022, the global public securities market recorded 321 transactions, generating revenue of $ 54.4 billion, a decrease of 37% and 51%, respectively, on an annual basis.

This sudden reversal can be attributed to a number of factors, both emerging and consolidating. These include: sharpening of geopolitical tensions, stock market volatility, price adjustments in recent IPOs, growing concerns about rising commodity and energy prices, and the potential impact of inflation interest rates, as well as the risk of delaying a full global economic recovery due to COVID-19.

In line with the sharp decline in global subscription activity, there has been a significant decline in cross-border subscriptions for “unicorn” companies (startups valued at more than $ 1 billion), “mega” subscriptions (transactions with revenues over $ 1 billion). and in public registrations through SPACs (special purpose acquisition companies). At the same time, a number of public subscriptions were postponed due to uncertainty and market volatility. These are some of the findings included in the regular, global IPO Trends report for the first quarter of 2022.

Sluggish performance on the American continent, compared to the first quarter of 2021

Public registrar activity on the American continent weakened this quarter, compared to the historically high levels of the first quarter of 2021, with the number of transactions decreasing by 72% (37 transactions) and the revenue decreasing by 95% ($ 2, 4 billion). The health and life sciences sector ranked first in terms of the number of transactions, while, thanks to a high value transaction, the financial services sector ranked first in terms of revenue. In second place in terms of number of transactions, raw materials were found, thanks mainly to the smaller Canadian stock exchanges (CSE and TSX-V), while the health and life sciences sector took second place in terms of revenue generated.

Revenue in the Asia-Pacific region increased by 18% in the first quarter of 2022, mainly due to high value public subscriptions

The year in the Asia-Pacific region started dynamically, with revenue increasing by 18% year-on-year, despite a 16% drop in the number of transactions in the first quarter of 2022. Four of its seven high-value public subscriptions (mega IPOs) in the first quarter of 2022, worldwide, took place in this region, including two of the largest transactions in the world in terms of revenue. The region completed 188 public registrations with revenues of $ 42.7 billion, surpassing the first quarter of 2021, which had the highest first-quarter revenue in 21 years. In terms of activity per sector, in terms of the number of transactions, the industry was ahead (40 public subscriptions and revenues of $ 3.3 billion), followed by the raw materials sector (37 public subscriptions and $ 5.3 billion), while the energy and telecommunications were ahead in terms of revenue ($ 11.2 billion through eight public subscriptions and $ 8.5 billion through three public subscriptions, respectively).
The market in Europe, the Middle East, India and Africa (EMEA) was affected by market volatility

The recent increase in market volatility due to geopolitical tensions has, as expected, affected the EMEIA stock markets and the subsequent corporate activity. Many candidate companies operating in the region have postponed their public registrations until a clearer picture of the financial prospects is crystallized. In total, the EMEA region recorded 96 public registrations, recording a decrease of 38% on an annual basis. Revenue generated was $ 9.3 billion, down 68%.

In the first quarter of 2022, Europe accounted for 15% of global IPO, but only 5% of revenue, with 47 transactions raising $ 2.7 billion. Two European stock exchanges were among the top 12 in the world, with based on the number of transactions and revenues collected.

Changes in the performance of industries

The first quarter of 2022 saw limited changes in the performance of individual sectors, due in part to the volatile economic environment and fluid market conditions. The technology and raw materials sectors dominated in terms of the number of public subscriptions, with 58 transactions each, raising $ 9.9 billion and $ 5.9 billion, respectively. Industry followed (57 public registrations and $ 5 billion). Technology continued to dominate the number of transactions for the seventh consecutive quarter, but took second place in terms of revenue – after seven consecutive quarters in first place – while accumulating higher capital than in the second quarter of 2020.

Also in the same period, the energy sector was in first place in terms of revenue ($ 12.2 billion, through 15 public subscriptions), due to the largest public subscription in the first quarter, which took place on the Korean Stock Exchange, while Telecommunications ranked third ($ 8.6 billion, through six transactions), due to the second largest public offering of the first quarter of 2022, on the Shanghai Stock Exchange.

Commenting on the findings of the research, Mr. Tassos Iosifidis, Partner and Head of the Department of Corporate Strategy and Transactions Advisers of the Hellenic Post, said: of this year, but also the “rally” of inflation and accuracy, had a clear impact on the activity of public registrations. Many companies have chosen to delay their entry into the stock market, or look for alternative forms of financing. As the market will remain fluid in the near future, choosing the right time for a public offering will be a difficult decision. However, lately there are some positive signs on the Athens Stock Exchange, a fact that will probably open a window of opportunity. ”