HONG KONG – The global initial public offering (IPO) market is showing signs of life as a stock market rebound has encouraged companies to test investor appetites for new listings, particularly in Asia. But a full recovery seems a long way off.
Around US$25 billion (S$33 billion) worth of IPOs were valued globally in March and April, nearly double the first two months of the year when listings virtually ground to a halt, according to those compiled by Bloomberg Data.
Issuers from Hong Kong to Milan saw an opportunity in the drop in market volatility, analysts said.
Activity was particularly brisk in Asia, where regional exchanges accounted for almost 80 percent of sales of new shares in April. Prices in Europe also recovered.
But fears of a recession have deterred US issuers and slowed a full recovery. Transaction sizes have been smaller on average, and money raised so far this year is 51 percent down on the same period last year.
“We are beginning to see green shoots of activity from companies resuming suspended litigation, but there is still a degree of uncertainty in the market,” said Mr. Jason Manketo, global co-head of law firm Linklaters’ equities practice.
Looking more closely at the data, Asia is practically the busiest area for deals in the world right now. But in a key change from 2022 – when the vast majority of large-volume deals were concentrated in mainland China – this year’s issuance is coming from a broader part of Asia.
Indonesia was the brightest spot with two nickel producers emerging on their debut. Rakuten Bank skyrocketed after raising 83.3 billion yen (S$829 million) in Japan’s biggest IPO since 2018, and KKR & Co-backed Chinese liquor company ZJLD Group last Thursday announced Hong Kong’s biggest offering of 2023 rated.
“The IPO market is coming back gradually and slowly. It’s not 100 percent back yet, but there are signs of life and renewed vigor,” said James Wang, co-head of equity capital markets at Goldman Sachs Group in Asia ex-Japan.
While the European IPO market has been hushed, with activity in 2023 down about 12 percent from the same period last year, there are signs the gloom is lifting.
Most notably, Lottomatica, the Italian gaming company backed by Apollo Global Management, opened the books for a €600 million (S$889 million) IPO last week, becoming the third major company to hit European stock exchanges this year.
Additionally, German web hosting company Ionos and electric motor components maker EuroGroup Laminations have both managed to raise more than $400 million in the region, despite both stocks struggling after their debuts.
The prospects for IPOs in the US remain difficult. Just $4.1 billion was raised this year for companies listed on U.S. exchanges, with just three — Nextracker, Atlas Energy Solutions, and Enlight Renewable Energy — accounting for a third of that amount.
“We are still in an uncertain world and uncertainty is the worst thing about new issues,” said Mr. Greg Martin, co-founder of Rainmaker Securities, which facilitates secondary transactions for private companies. BLOOMBERG
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