The US IPO market showed signs of life during Q1, despite an ongoing freeze in the global market that saw proceeds plunge by 61% from last year’s quarter, according to a new report by EY.
While the number of deals globally only fell by 8% to 299 during Q1, proceeds shrank dramatically as companies who dared to brave the icy IPO waters went for significantly smaller deals. The amount of money raised during the quarter was $21.5B, down from $54.6B in the 2022 period.
The sharpest decline was seen in the Asia-Pacific region, where proceeds sank 70% to $12.7B and the number of deals fell 6% to 175. The next biggest drop was seen in Europe/Middle East/India/Africa, with proceeds down 36% to $6.2B and the number of deals declining 19% to 84 from Q1 2022. Asia still dominated the global market, however, accounting for 59% of all IPO deals.
The Americas were a bright spot. The amount of cash raised by IPOs in the Americas, which is dominated by the US exchanges, climbed 9% to $2.6B as the number of deals jumped 11% to 40, with 31 of them in the US, according to the EY report.
EY noted that while the IPO market started off the year on a high note, the mood quickly soured amid rising interest rates and turmoil in the banking sector. Meanwhile, the number of companies waiting to IPO has been steadily growing in hopes the window reopens later this year.
“Amidst persistent macroeconomic and geopolitical uncertainty, exacerbated by stress in the global banking system, IPO windows are fleeting and funding conditions are getting tougher, with investors prioritizing value over growth,” said Paul Go, EY’s global IPO leader, in the report.
Go added that companies striving to IPO need to focus on building sustainable businesses with strong fundamentals to meet the “challenges” of going public during these volatile times.
In related news, Richmond Federal Reserve President Tom Barkin said Thursday that the Fed could hike interest rates further if inflation remains above the central bank’s goal.
Image and article originally from seekingalpha.com. Read the original article here.