The value of initial public offerings (IPOs) in the United States and Europe has dropped 90% this year as the Ukrainian War and rising inflation and interest rates forced companies to shelve plans. of IPO.
Just 157 companies raised a total of US$17.9 billion (R$85 billion) in the first five months of 2022, compared with 628 that raised US$192 billion (R$912 billion) in the same period last year, according to Dealogic data.
Globally, the value of IPOs dropped 71% – from $283 billion to $81 billion – in the period, and the number of listings went from 1,237 to 596.
Figures suggest that the fall in emissions in the first quarter of 2022, triggered by Russia’s invasion of Ukraine, has not eased, with volumes also falling sharply year-on-year towards the end of the second quarter at the end of this month.
The first three quarters of 2021 were the busiest period ever for listings as companies rushed to go public after putting plans on hold during the coronavirus pandemic. But market volatility, the Ukrainian War and the threat of global recession have made them far less inclined to do so this year.
“A lot of people were eager to go, and then a confluence of factors hit them all at once,” said Martin Glass, a partner at law firm Jenner & Block, which advises companies on IPOs.
“Once things stabilize, we’ll see a return to activity, even if it doesn’t reach last year’s levels. People aren’t abandoning ship, they’re taking a break.”
He added that the US market has been especially affected by a near collapse in the listings of companies for special purpose takeovers (Spac), shell companies that go public to raise money and then find a takeover target.
In the past two years, Spac’s deals have hit record levels, but that has declined dramatically in the past six months after some disappointing performances, more scrutiny from regulators and a diminished appetite for banks to underwrite them.
Dealers said that despite generally worsening conditions for IPOs, rising energy prices in the wake of the Ukrainian War made listings a more attractive option for oil and gas companies.
There are also several major IPOs in the pipeline that could be completed by the end of the year.
British pharmaceutical group GlaxoSmithKline has sought regulatory approval to bring its Haleon healthcare joint venture to market this year in what could be the biggest London listing in a decade.
In March, US insurer AIG filed a long-awaited IPO request for its life and asset management business, which could value the unit in excess of $20 billion. Volkswagen is planning a €20 billion partial float from Porsche later this year.
But lawyers predict that many planned IPOs will be delayed to 2023 as conditions are slow to improve.
“If we come back from summer break in September and for some bizarre reason things suddenly get better, maybe there will be more activity,” said Inigo Esteve, a partner at White & Case, which advises companies on IPOs. “But I’m not sure many people are expecting a change in underlying conditions by then.”
He added that he expects many to defer to next year at the earliest. “Why would you release it now if you can wait for better conditions?”
Among the ten most valued IPOs this year, only two were listed on American or European stock exchanges. Private equity group TPG raised $1 billion on Nasdaq in January, while Norwegian oil and gas producer Vår Energi raised $880 million in Oslo.
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