The Global Initial Public Offering market closed 2023 with 1,298 Global Initial Public Offerings raising US$123.2b.
A palpable uptrend in western market sentiment appears to be absorbing the economic slowdown taking place in China. Whilst emerging markets are witnessing small-cap deals picking up heat, compared to the lukewarm reception of larger 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 Further details on these trends can be found in the EY Global Initial Public Offering (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.
The Europe, the Middle East, India, and Africa (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 the (Middle East and North Africa) MENA, heightened activity in India and Central, Eastern and South-eastern Europe and Central Asia (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. Although 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. Overall, in EMEIA, the outlook for 2024 is optimistic but cautious, given an unpredictable market environment.
Stuart Gardner (pictured), EY Partner and CI Strategy and Transactions Leader explained: “In the face of challenging market conditions, compounded by high inflation and elevated interest rates, the UK’s IPO landscape witnessed a subdued performance in 2023, with only 14 listings raising US$0.6b, compared to 22 listings raising $1.2b in 2022.
“The Financial Conduct Authority’s (FCA) commitment to simplifying the listings regime is expected to make London a more attractive destination for a diverse array of companies. Striking a delicate balance, regulators are increasingly looking to reduce ‘red tape’ while safeguarding the interests of investors and stakeholders. The potential impact of the UK regulator's efforts to streamline listings processes holds promise, and we anticipate a renewed vigour in IPO activity in the coming year that will hopefully also translate into more Channel Islands company IPOs.”
While there is strong interest in IPOs, especially in high-growth economies, EY is advising companies planning to go public to focus on building solid foundations and managing price expectations. This is identified as important as global conditions, including monetary policy changes and geopolitical uncertainties, continue to evolve in 2024.