The Global Initial Public Offering (IPO) market concluded 2023 with a total of 1,298 IPOs, collectively raising a significant US$123.2b. This year saw a shifting landscape with an improved market sentiment in the west, offset by China's cool-down, and a stark contrast between burgeoning small-cap deals in developing markets and sluggish large offerings.
Notably, the IPO proceedings in 2023 fell behind the slow pace of the previous year by about a third, despite deal volumes picking up in both the Americas and EMEIA (Europe, Middle East, India and Africa) regions, as found in the EY Global IPO Trends 2023 report.
Despite a strong market rally and low volatility index, bolstered by positive economic data, public offerings remained subdued in many developed markets, excluding a brief window of activity in the US in September.
After two years of subdued listings, IPO issuers and investors were eager to capitalise on a market upswing. However, this enthusiasm dampened post-September after high-profile IPOs underperformed, thereby affecting market sentiment. Extraordinarily aggressive monetary policies became another key factor impacting IPO activity, surpassing the influence of overall stock market performance.
Benchmarking against the five-year average IPO activity underlined key highlights with Indonesia, Malaysia, and Turkey notching increases in deal volume and proceeds.
Meanwhile, India, Saudi Arabia, and Thailand recorded a rise in the number of IPOs vs. their five-year average. In striking contrast, Hong Kong's IPO market hit a 20-year low in proceeds in 2023, with IPO issuance in Mainland China slowing down in the second half of the year.
Industrials and consumer sectors saw positive movements this year, with industrials clinching the most deals and consumers being the only sector to witness an increase in both IPO volume and proceeds.
Conversely, the technology sector underwent declines driven by disappointing investor responses to high-profile tech IPOs in the US. Despite this, technology IPOs led in the proceeds for 2023. The health and life sciences sector saw a significant downturn in IPO volume and proceedings, particularly in Mainland China and the US.
The performance of Americas' IPOs in 2023 saw an increase of 15% compared with 2022, and its proceeds jumped nearly three times that of 2022 due to several high-profile deals. Meanwhile, the Asia-Pacific market saw 732 companies go public, raising US$69.4b, a year-on-year fall of 18% and 44% respectively.
The EMEIA IPO market, despite a 39% decrease in proceeds, is on its path to recovery, with a 7% rise in volume, owing to large deals from MENA (Middle East and North Africa), heightened activity in India and CESA, and a few high-profile cross-border IPOs to the US.
Enthusiasm for IPOs remains high and smaller deals are emerging with improved after-market performance, says George Chan, EY Global IPO Leader. Globally, moderating inflation and potential 2024 interest rate cuts could attract investors back to IPOs by improving liquidity and return outlooks.
However, sustained geopolitical instability may undermine confidence. The outlook for 2024 is largely dependent on improving macro backdrop for an IPO revival as companies await more favourable market conditions.