Global IPO Watch

Q1 2023 overview

Strong Q1 for equity indices despite volatility in the banking sector and sticky inflation  

Global equity markets kicked off strongly in 2023, supported by lower energy and oil prices, positive business sentiment indicators and Mainland China reopening. As the quarter progressed, the geopolitical backdrop remained challenging and central banks globally continued to tighten monetary policy as the encouraging inflation data started to reverse with core inflation proving to be stickier than expected. However, despite the short lived equity market sell-off that followed the unexpected turbulence in the US and European banking sectors, indices rallied further on strong retail earnings and managed to close the quarter with sizable gains - the S&P 500 and the Stoxx 600 that both closed up 7%, and the Shanghai index that closed up 6%.

IPO markets in the US and Europe remain largely closed, but Asia and the Middle East continue to outperform

Following a slow 2022 IPO market, Q1 2023 new issuance volume remained underwhelming. Generally a quiet quarter for IPOs, the US and European IPO markets in Q1 were further impacted by the volatility in the banking sector leading to very limited activity. The Middle Eastern IPO market continued to deliver landmark transactions, including a mega privatisation IPO. Asia-Pacific Q1 IPO proceeds accounted for 66% of global IPO proceeds as issuance across the region remained strong, with Mainland China and Indonesia driving IPO volumes this quarter.
On the follow-on equity issuance front, Q1 activity remained in line with historical averages, with issuers taking advantage of the more stable spells in equity prices. 

Volatility in the treasury and bond markets leading to widening of the credit spreads

Against a volatile market backdrop, the fears of the banking crisis and potential recession in the US ignited some of the biggest swings in the US Treasury market in years. The global bond market also saw a significant widening of the credit spreads indicating weaker economic prospects. Whilst US and European bonds posted positive returns within the first quarter, there was negative impact felt toward the end of the quarter by the turbulence in the banking sector. Central banks' "higher for longer" stance on interest rates is a theme that will drive the bond market in the near future.

Source: Dealogic and Capital IQ with PwC analysis


Key market drivers going forward 

As we look further into 2023, market participants will care about how quickly inflation will decline and the likelihood of central banks pausing rate hikes. As Mainland China’s economy is likely to continue benefiting from its reopening, the downside risks largely sit within the developed world. Increased risks to financial stability could lead to tightening credit conditions which may negatively impact growth in the developed economies. Together with flashing US recession warning signals, this could weigh on investor sentiment to equities and, in turn, equity issuance.

There remains significant investable cash that will be more than enough to spark the IPO market into life when sentiment improves, whilst focus will be on quality  

In the long term, equities remain an attractive asset class, but in light of recession concerns, investors will need to find a balance between equities that entail a greater risk , but with potential greater returns, and generally lower-risk assets such as bonds. 

Quality and stock fundamentals will be front of mind for IPO investors. Since 2008 the IPO market has mainly been fueled by fast-growth and tech companies, a number of whom were loss making and valued on revenue multiples. Most companies that are planning to list now should show a track record of, or a clear path to, profitability. In addition, companies will need to accept the new realities of a reversion of valuations to more historical levels.


US dropped to third place

The US dropped to third place in terms of IPO proceeds raised this quarter as US and European markets remain quiet

  • Three IPOs in the UAE raised $3.2bn, beating the US to second place behind Mainland China.

  • The UK did not make the cut with only two IPOs raising $0.1bn, 80% lower than the first quarter of 2022 where 10 IPOs raised combined proceeds of $0.5bn.

Technology IPOs were most prevalent

Surprisingly, given market sentiment towards the sector, technology IPOs were most prevalent in the first quarter of 2023

  • More than 50% of IPOs in this sector were in Mainland China with just one sizable transaction in the US  

  • IPOs in the energy and utilities sectors were rife, as would be expected given sector dynamics (e.g. energy transition, commodity pricing)

Backlog of potential IPO candidates

Elevated interest rates are making leverage transactions less compelling and the dearth of IPOs in the Western hemisphere over the past year are together leading to an increasing backlog of potential IPO candidates

  • The key for IPO candidates is to be ready to access the market when markets stabilise and re-open.

Mainland China continues to dominate

Mainland China continues to dominate IPOs in Q1 2023 representing half of total IPO proceeds globally

  • Mainland China accounted for 39% of global IPO proceeds in 2022, notably ahead of the US which accounted for just 13% of the total.

  • The Asia-Pacific region dominated IPO issuance this quarter with; Indonesia, Japan, Hong Kong SAR and South Korea all securing their place in the the top 10.

End of recent SPAC phenomenon

The recent SPAC phenomenon appears to be ending as the levels of new SPAC issuance normalises 

  • Most of the current SPAC merger activity originates from the massive cohort of SPACs that listed in 2021 as they reach the end of the life.

  • SPACs that have completed their mergers have generally struggled to recover their deal valuation.

Relative attractiveness of markets continues

The debate around the impact of regulation on the choice and relative attractiveness of markets continues

  • However, notwithstanding this and the recent low IPO volumes, the US market, which is by no measure a lesser regulated market, remains the top cross-border market of interest to potential issuers with 20 cross-border US IPOs in Q1, 13 of which originated from Mainland China.

Q1 2018 - Q1 2023 regional view

  • Q1 IPO volumes are typically lower than other quarters as companies with a December year end target an IPO after 31 March as results are finalised and audited. Q1 2021 was an exception to the rule, fuelled by the SPAC IPO boom and listings deferred from 2020 as the world adjusted to COVID-19.

  • Asia-Pacific Q1 2023 IPO proceeds accounted for 66% ($17bn) of global IPO proceeds as issuance across the region remained strong. Whilst there were 158 IPOs across Asia-Pacific in Q1 2023, proceeds raised were 51% lower than Q1 2022 when 175 IPOs raised $34bn.

  • Q1 IPO proceeds in the Americas were $3.1bn from 44 IPOs, representing the lowest first quarter in over 5 years.

  • EMEA Q1 IPO proceeds were $5.5bn from 32 IPOs, with the UAE accounting for 58% of proceeds in the region.

Top 10 countries for IPO issuance

  • Mainland China accounted for half ($13.0bn) of all IPO proceeds globally in Q1 2023 with the US accounting for just 12% ($3.1bn) . This indicates further decoupling between the US and Mainland China equity markets. 
  • The UAE ranked higher than the US this quarter in terms of IPO proceeds as economic growth and privatisation programmes continue to support IPO markets across the region.

  • Indonesia makes a rare appearance in the Top 10 this quarter as a number of nickel miners completed IPOs, supported by the growing demand for the commodity used in batteries for electric vehicles. 

  • Hong Kong SAR IPO activity remains muted in Q1 2023 as Chinese companies continue to opt for a listing in either Shanghai, Beijing or Shenzhen.

  • The UK fails to make the top 10 list once more as the UK IPO market remains closed for yet another quarter.

Q1 2023 IPOs by sector

  • The Computer and electronics sector continues to dominate IPO issuance with 57 IPOs raising $7.1bn of proceeds, 16 of which were in Mainland China raising $3.9bn.

    • The largest IPO in this sector in Q1 was from US based renewable energy technology company, raising $0.7bn on NASDAQ in February 2023.

  • IPO activity in the Oil and Gas sector remains buoyant due to favourable commodity prices and the privations of businesses in this sector from the Middle East. Five IPOs raised $3.4bn in Q1, including $2.5bn raised by an Abu Dhabi based energy group in March 2023.

  • There were two notable IPOs in the Utility & Energy sector this quarter:

    • An electricity and thermal power generation and distribution Services Company from Mainland China raised $1.0bn; and

    • A geothermal energy Company from Indonesia raised $0.6bn

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Stuart  Newman

Stuart Newman

Global IPO Centre Leader, PwC United Kingdom

Tel: +44 (0)7711 799 611

Mike Bellin

Mike Bellin

Partner, Consulting Solutions, US IPO Leader, PwC United States

Michael  Wisson

Michael Wisson

Partner, PwC United Kingdom

Tel: +44 (0)7817 671094

Jie Shen

Jie Shen

Partner, PwC China

Tel: +[86] (21) 2323 3659

Nadja Picard

Nadja Picard

Global Reporting Leader, PwC Germany

Tel: +49 211 981 2978

Edmond Chan

Edmond Chan

Partner, PwC Hong Kong

Tel: +[852] 2289 1128

Stephan Wyrobisch

Stephan Wyrobisch

Partner, Capital Markets, PwC Germany

Tel: +49 69 9585-3512