HONG KONG – The global market for initial public offerings (IPOs) is showing signs of life as a rebound in the stock market has emboldened companies to test investor appetite for new listings, particularly in Asia.
But a full-fledged recovery looks distant.
Roughly US$25 billion (S$33 billion) worth of IPOs was priced globally in March and April, nearly twice the amount seen in the first two months of the year when listings virtually ground to a halt, according to data compiled by Bloomberg.
Issuers from Hong Kong to Milan saw a window of opportunity with the decline in market volatility, according to analysts.
Activity was particularly buoyant in Asia, where regional exchanges accounted for nearly 80 per cent of new share sales in April. Listings in Europe also picked up.
But concern about a recession has deterred US issuers, slowing a full-fledged recovery. Deal sizes on average were smaller, and the money raised so far in 2023 remains 51 per cent below the same period in 2022.
“We are beginning to see green shoots of activity with companies restarting processes that were on hold, but there is still a fair degree of uncertainty in the market,” said Mr Jason Manketo, global co-head of law firm Linklaters’ equities practice.
Drilling down into the data, Asia is handily the busiest area for offerings in the world right now. But in a key change compared with 2022 – when the vast majority of large-sized deals were concentrated in mainland China – issuance is coming from a broader swathe of Asia in 2023.
Indonesia has been the brightest spot, with a pair of nickel producers surging in their debut. Rakuten Bank soared after raising 83.3 billion yen (S$829 million) in Japan’s largest IPO since 2018, and KKR & Co-backed Chinese liquor company ZJLD Group last Thursday priced Hong Kong’s largest offering of 2023.
“The IPO market is coming back gradually and slowly. It is not 100 per cent back yet, but there are signs of life and renewed vigour,” said Mr James Wang, co-head of equity capital markets at Goldman Sachs Group in Asia ex-Japan.
While Europe’s IPO market has been moribund, with 2023 activity down about 12 per cent from the same period in 2022, there have been signs of gloom lifting.
Most notably, Lottomatica, the Italian gambling company backed by Apollo Global Management, opened books last week for a €600 million (S$889 million) IPO, becoming the third large firm to tap European exchanges in 2023.
Additionally, German Web-hosting company Ionos and electric motor component maker EuroGroup Laminations have managed to raise more than US$400 million in the region, though both stocks have struggled after debuting.
The outlook for IPOs in the United States remains challenged. Only US$4.1 billion has been raised for companies listing on US exchanges in 2023, with just three – Nextracker, Atlas Energy Solutions and Enlight Renewable Energy – accounting for a third of that amount.
“We’re still in an uncertain world, and uncertainty is the worst thing for new issuances,” said Mr Greg Martin, co-founder of Rainmaker Securities, which facilitates secondary transactions for private companies. BLOOMBERG
