- Amount of money raised in public markets by fresh public offerings falls by 90% in Europe and the U.S.
- Latter half of the year may see a pickup in IPOs if the macro situation improves and inflation pressures start to ease.
Given the uncertain macroeconomic conditions, companies contemplating prospective IPOs have withdrawn into their shells like frightened tortoises and it’s hard to blame them.
With the total value of IPOs in the U.S. and Europe falling by 90% this year alone, and the prospects for new issuances looking increasingly bleak, it would be a brave firm to raise public monies in the current climate.
According to data from Dealogic, just 157 companies in the U.S. and Europe raised US$17.9 billion in the first five months of 2022, compared with the 682 that scored some US$192 billion during the same period last year.
And globally, the value of IPOs has dropped by 71%, from US$238 billion to US$81 billion, with the number of listings falling by over half from 1,237 to 596.
But there are some bright spots in a sea of darkness – oil and gas companies, long considered the pariah of public markets because of environmental concerns, are seeing listings an attractive option against a backdrop of higher energy prices.
Some investors are betting that the adage to “sell in May” and go away, could mean that bargains are had from some of the languishing Class of 2021 IPOs which may see a resurgence after the summer.
A lot could have changed by then, the Russian invasion of Ukraine may have wound down to nothing, inflation may have eased, and central banks may walk back their tightening measures on concerns over slowing growth and rising unemployment.
