"Global IPO Market Contraction, Expectation for Interest Rate Cuts and Investment Sentiment Recovery This Year"

Global IPO Deals and Funds Raised Last Year Down YoY
Emerging Markets Active Mainly in Small Deals
Overall Global Market Shows Weakness in Large Deals

The total number of global initial public offerings (IPOs) recorded last year was 1,298, an 8% decrease compared to 1,415 in 2022, and the total amount raised was $123.2 billion, down 33% from $184.3 billion the previous year.

On the 15th, global accounting and consulting firm EY Hanyoung announced this in the publication of the '2023 EY Global IPO Trends Report.'

Excluding the U.S. market, major national markets remained subdued last year. In particular, IPOs that had been anticipated since September were consecutively canceled, dampening market enthusiasm. In fact, the number of companies that withdrew or postponed their IPOs accounted for 54% of the total IPOs, a sharp increase compared to the average withdrawal rate of 16.5% from 2014 to 2021. The maintenance of high interest rates due to monetary policy also negatively impacted the IPO market.

By region, the Americas saw 153 IPOs, a 15% increase from the previous year. They raised a total of $22.7 billion, nearly tripling (155%) in scale compared to the previous year. The Europe, Middle East, India, and Africa (EMEIA) region recorded 413 IPOs, a 7% increase year-on-year, but the amount raised decreased by 39% to $31.1 billion.

In the Asia-Pacific region, a total of 732 companies went public, raising $69.4 billion. The amount raised decreased by 44% compared to the previous year, accounting for 57% of the total global market by amount. In particular, the IPO scale and amount in China and Hong Kong continued to decline, marking a challenging year. The Hong Kong IPO market recorded its lowest fundraising amount in 20 years this year, and China also experienced sluggishness in the second half of the year. Looking at the average IPO activity over the past five years, the IPO scale in Indonesia, Malaysia, and Turkey increased noticeably. The number of newly listed companies rose in India, Saudi Arabia, and Thailand.

Last year, there were a total of 77 IPOs in South Korea, a 12% increase from 69 the previous year. However, the amount raised was $2.7 billion, down 79% year-on-year. This was due to the effect of LG Energy Solution’s large IPO in the first quarter of 2022. Domestic companies that postponed their IPO plans due to market deterioration are expected to pursue IPOs this year as the market recovers.

Looking at the status of global IPOs by industry sector, the consumer goods sector was the only one to see increases in both IPO scale and amount compared to the previous year. On the other hand, the technology sector did not receive enthusiastic investor responses to large U.S. companies. Startups related to generative artificial intelligence (AI) remain at the venture capital (VC) investment stage, continuing the downward trend. Nevertheless, they raised $32.2 billion, leading the overall market. The IPO scale and amount in the healthcare and life sciences sectors decreased significantly in China and the U.S. The number of companies funded by private equity (PE) and VC has plummeted by 78% since 2021.

Park Jung-ik, Head of the Audit Market Division at EY Hanyoung, said, "If recent financial authorities’ measures to strengthen investor protection and the prospect of interest rate cuts improve liquidity and profitability outlooks, we can expect a recovery in investor sentiment." However, he added, "Risks such as geopolitical uncertainty still remain. Companies pursuing IPOs this year should be cautious in setting the public offering price and build fundamentals such as financial statements, cash flow, and growth strategies to meet market expectations."

This content was produced with the assistance of AI translation services.