18 October 2023
While IPOs are often considered in isolation from the broader market, they are powerful indicator of underlying market sentiment. Whatever type of IPO we are looking at, technology being one of the more popular at the moment, there needs to be significant demand. As they say, you don't get a second chance to make a first impression on stock markets!
A report by Ernst & Young has cast a fascinating light on the IPO market, the influence of the APAC region and growth in the Americas. The broader perspective is quite stark; in the first nine months of 2023, there were:-
· 968 IPOs
· $101.2 billion of capital raised
This is a 5% decrease in the number of IPOs and a staggering 32% decrease in the proceeds raised, compared to the first nine months of 2022, and puts the challenging economic times into perspective.
If we look at individual sectors, change is coming:-
· Technology is very strong
· Industrials have fallen to second spot
· Artificial Intelligence (AI) IPOs dominate the future pipeline
· Unicorn IPOs are down 80% year-on-year (start-ups valued over $1 billion)
There is a strong core demand for technology IPOs, with many in the pipeline awaiting an improvement in market sentiment.
As we mentioned above, the IPO market measures investor sentiment and demand for new issues. Looking on a global basis, some exciting trends are emerging:-
· APAC region accounts for 60% of global IPO market
· APAC IPO volumes are down 8% year-on-year, with funds raised down 41%
· Proceeds raised in the Americas have increased by 159% in the year so far
· The EMEIA region saw an increase of 2% in volume but a reduction of 44% in proceeds in the year so far
The APAC region continues to dominate the IPO market and global GDP and is now the central financial hub of the global economy. Consequently, many investors look towards the Far East when considering demand for IPOs.
While the APAC region is a hotbed for IPOs, there is robust demand in Southeast Asia and countries such as:-
Interestingly, while Singapore leads in many different investment areas, historically, it has been moderately strong in the IPO sector. However, this may be changing with foreign investors now focused on Singapore's political and economic stability. This, together with a government which is undoubtedly pro-business and pro-investors, creates an exciting mix.
While IPOs are essential for companies raising funds, they are a solid barometer of underlying investor sentiment. We have seen many IPOs delayed in recent months due to global economic instability and uncertainty regarding interest rates. However, there are signs of investors returning to the market.
Technology shares, particularly artificial intelligence companies, will likely dominate the IPO market in the short to medium term. There are several companies in the pipeline as and when markets recover, and they can price their issues "fairly". The fact that even in these difficult times, the APAC region has managed to maintain a 60% share of global IPOs is very encouraging.Back to News