Global IPO activity declined in volume and value in the last year, an analysis by EY has concluded.
1,298 initial public offerings (IPOs) to the value of $123.2 billion were launched during the year, the study showed, representing an 8% reduction in volume and a 33% drop in proceeds year on year.
An initial public offering is the process of offering shares of a private corporation to the public in a new stock issuance for the first time allowing the company to raise equity capital from public investors.
The 2023 EY Global IPO Trends Report notes that the global IPO market experienced shifting landscapes in 2023, with improved Western market sentiment and a pickup in deal volumes in both the Americas and EMEIA (Europe, Middle East, India and Africa).
However, that was counterbalanced by a cooling in the Chinese economy, as well as the contrasting fortunes of small-cap deals in the developing market versus more muted larger offerings.
The rising interest rate environment in response to the highest rates of inflation witnessed in decades globally also contributed.
Following on from two years of subdued activity, investors were anticipating an upswing towards the latter end of the year against the backdrop of a strong market rally and positive economic data.
Enthusiasm waned after a number of high profile IPOs - including chip designer Arm and fashion brand Birkenstock - failed to meet market expectations.
"IPO activity has faced a challenging period in 2023 both globally and here in Ireland, although we are optimistic that there is light at the end of the tunnel for companies and investors," Fergal McAleavey, EY Ireland Corporate Finance Partner said.
"Enthusiasm for IPOs among investors remains high globally and smaller deals are emerging with improved after-market performance. Moderating inflation globally and the potential for interest rate decreases in key markets could attract investors back to IPOs by improving liquidity and return outlooks."
However, sustained geopolitical instability may undermine confidence, he cautioned.
"For IPO-bound companies, it will be important to keep a clear focus on building fundamentals and managing price expectations to capitalise when the opportunities arise," he concluded.
