Value of US and European IPOs tumbles 90% this year

Private equity group TPG raised $1 billion on the Nasdaq in January. Just two of the 10 highest-valued IPOs this year listed on US or European exchanges. Photo / Getty Images

First-quarter drought extends into second quarter as Ukraine war and volatility deter companies from listing the value of initial public offerings in the US and Europe has fallen 90 per cent this year as the Ukraine war and rising inflation and interest rates have forced businesses to shelve plans to go public.

Just 157 companies raised a total of $17.9bn in the first five months of 2022, compared with 628 that raised $192bn in the same period last year, according to data from Dealogic.

Globally, the value of IPOs dropped 71 per cent — from $283bn to $81bn — in the period and the number of listings fell from 1,237 to 596.

The figures suggest that the issuance slump in the first quarter of 2022 which was triggered by Russia's initial invasion of Ukraine has not eased, with volumes also set to be sharply down year-on-year at the end of the second quarter, later 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 war in Ukraine and the threat of global recession have made companies much less willing to do so this year.

"A lot of people were raring to go and then a confluence of factors hit them all at once," said Martin Glass a partner at law firm Jenner & Block who advises companies on IPOs.

"Once things stabilise, we will see a return of activity, even if it does not reach last year's levels. People are not abandoning ship — they are pausing."

He added the US market had been particularly affected by a near collapse in listings of special purpose acquisition companies, shell companies that list to raise money and then find an acquisition target.

In the past two years, Spac deals hit record levels, but this has slowed to a trickle over the past six months, following some disappointing performances, more scrutiny from regulators and waning appetite among banks to underwrite them.

Dealmakers said despite worsening conditions in general for IPOs, higher energy prices as a result of the Ukraine war made listings a more attractive option for oil and gas companies.

There are also several major IPOs in preparation that could be completed by the end of the year.

UK pharma group GlaxoSmithKline has sought regulatory approval to bring its consumer health joint venture Haleon to market this year in what is expected to be the largest listing in London for a decade.

In March, US insurer AIG filed for a long-expected IPO of its life and asset management business that could value the unit at more than $20bn. Volkswagen is planning a €20bn partial float of Porsche later this year.

But lawyers predict many planned IPOs will be pushed back into 2023 as conditions take time to improve.

"Maybe if we come back from the summer holidays in September and for some bizarre reason things have suddenly turned for the better, maybe there will be more activity," said White & Case partner Inigo Esteve, who advises companies on IPOs.

"But I'm not sure a whole lot of people are holding their breath for such a change in the underlying conditions by then."

He added that he expected many would postpone until next year at the earliest. "Why would you launch now when you could wait for better conditions?"

Among the 10 highest-valued IPOs this year, just two listed on US or European exchanges. Private equity group TPG raised $1bn on the Nasdaq in January, while Norwegian oil and gas producer Vår Energi raised $880mn in Oslo.

Written by: Owen Walker
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