Initial public offerings (IPOs) have plummeted globally in the first quarter of this year after a record showing last year, as volatility stoked by the war in Ukraine and soaring inflation set investors on edge and inhibited deals.
About US$65 billion has been raised via IPO around the world so far this year, down 70 percent from US$219 billion in the first three months of last year, data compiled by Bloomberg showed.
That puts the global market on track for the lowest quarterly proceeds since the onset of the COVID-19 pandemic in 2020.
Photo: Brendan McDermid, Reuters
Still, companies such as renewable energy provider Eni Plenitude SpA and skin care business Galderma SA are lining up to test investors’ appetite for new shares in the coming months.
“This is probably the worst time in five years in terms of market sentiment,” said Li Hang (李航), head of equity capital markets and syndicate at brokerage CLSA.
Rising interest rates combined with sharp market swings have prompted investors to steer clear of companies with high growth forecasts, but relatively little profits — the kind of stocks that dominate the IPO market.
“You need a more stable market to find the level at which IPOs can clear,” said Saadi Soudavar, Deutsche Bank AG’s cohead of equity capital markets for Europe, the Middle East and Africa.
Wild market swings have scuttled IPOs from New York to New Delhi.
Life Insurance Corp, which planned to raise as much as 654 billion rupees (US$8.57 billion) for the Indian government with an offering before the end of this month, is looking at a new date in the middle of May. The offering would be one of the largest global listings this year.
Even quick-fire deals such as blank-check offerings, which are typically priced in a matter of days, are falling by the wayside. The vehicles, also known as special purpose acquisition companies, are shelving their listings at a record pace this year, as investor enthusiasm wanes due to poor returns and heightened regulatory scrutiny.
Investment banks are starting to feel the effects, too.
UBS Group AG began laying off a handful of bankers in equity capital markets in Europe, the Middle East and Africa this month, people familiar with the matter said.
However, it is not all doom and gloom.
While follow-on share sales start to pick up from Asia to Europe and the US, IPOs have been bucking the global trend and racing ahead in the Middle East, where high oil prices and rising interest rates are helping regional markets sharply outperform international ones.
“The Middle East is the one bright spot in an otherwise quiet global ECM [enterprise content management] market,” said Andree Chakhtoura, head of investment banking for the Middle East and North Africa at Bank of America Corp. “There is a wider and deeper market now than there has ever been before, and the offering is diversified.”
Bankers continue to bet on a recovery in the second quarter, fueled in part by a full pipeline of large listing candidates readying to tap public investors and the green shoots of a stock market rebound.
“A key question is when we can price the substantial pipeline of European IPOs waiting in the wings. We are hoping the answer is as early as May, June,” Soudavar said.
A number of high-profile listings from the likes of Thyssenkrupp AG’s Nucera and Italian green hydrogen specialist Industrie De Nora SpA are in the works in Europe. In the US, pop star Rihanna’s Savage X Fenty lingerie company and SoftBank Group Corp-backed chipmaker Arm Ltd are among the big-ticket IPOs bankers are working on.
In Asia, private equity firm PAG and electric vehicle start-up Hozon New Energy Automobile Co (合眾新能源汽車) are in the pipeline with billion-dollar-plus offerings.
“The glass half-full view is that we could be in for a busy second quarter in equity capital markets,” Andreas Bernstorff, BNP Paribas SA’s head of equity capital markets for Europe, the Middle East and Africa, said, adding that he expects “to see block trades and equity-linked deals pick up first and IPOs scheduled after Easter on the back of first-quarter numbers.”
TECH SECURITY: The deal assures that ‘some of the most sought-after technology on the planet’ returns to the US, US Secretary of Commerce Gina Raimondo said The administration of US President Joe Biden finalized its CHIPS Act incentive awards for Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), marking a major milestone for a program meant to bring semiconductor production back to US soil. TSMC would get US$6.6 billion in grants as part of the contract, the US Department of Commerce said in a statement yesterday. Though the amount was disclosed earlier this year as part of a preliminary agreement, the deal is now legally binding — making it the first major CHIPS Act award to reach this stage. The chipmaker, which is also taking up to US$5 billion
TRADE WAR: Tariffs should also apply to any goods that pass through the new Beijing-funded port in Chancay, Peru, an adviser to US president-elect Donald Trump said A veteran adviser to US president-elect Donald Trump is proposing that the 60 percent tariffs that Trump vowed to impose on Chinese goods also apply to goods from any country that pass through a new port that Beijing has built in Peru. The duties should apply to goods from China or countries in South America that pass through the new deep-water port Chancay, a town 60km north of Lima, said Mauricio Claver-Carone, an adviser to the Trump transition team who served as senior director for the western hemisphere on the White House National Security Council in his first administration. “Any product going
CHANGING JAPAN: Nvidia-powered AI services over cellular networks ‘will result in an artificial intelligence grid that runs across Japan,’ Nvidia’s Jensen Huang said Softbank Group Corp would be the first to build a supercomputer with chips using Nvidia Corp’s new Blackwell design, a demonstration of the Japanese company’s ambitions to catch up on artificial intelligence (AI). The group’s telecom unit, Softbank Corp, plans to build Japan’s most powerful AI supercomputer to support local services, it said. That computer would be based on Nvidia’s DGX B200 product, which combines computer processors with so-called AI accelerator chips. A follow-up effort will feature Grace Blackwell, a more advanced version, the company said. The announcement indicates that Softbank Group, which until early 2019 owned 4.9 percent of Nvidia, has secured a
CARBON REDUCTION: ‘As a global leader in semiconductor manufacturing, we recognize our mission in environmental protection,’ TSMC executive Y.P. Chyn said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, yesterday launched its first zero-waste center in Taichung to repurpose major manufacturing waste, which translates into savings of NT$1.5 billion (US$46 million) in environmental costs a year. The environmental cost savings include a carbon reduction benefit of 40,000 tonnes, equivalent to the carbon offset of over 110 Daan Forest Parks, the chipmaker said. The Taichung Zero Waste Manufacturing Center is part of the chipmaker’s greater efforts to reach its net zero emissions goal in 2050, aligning with the UN’s 12th Sustainable Development Goal. The center could reduce TSMC’s outsourced waste processing
RSS