What The Declining IPO activity in 2022 Means for Hiring?
The IPO market witnessed weakened activity between Q1 and Q2 this year, with
lower deal numbers and proceeds. Several factors have contributed to this, such as the pandemic, geopolitical volatility, and weak post-IPO share price performances, with global markets experiencing declines.
In Q2 2022, only 305 deals raising US$40.6b in proceeds were reported globally, a decline of 54% and 65% respectively, YOY. The energy industry saw 3 of the 4 top deals, bumping the tech sector from first place in terms of IPO fundraising, with deal size averages growing to around US$608m from US$191m YOY. The Special Purpose Acquisition Company (SPAC) IPOs have especially been challenged this year due to regulatory uncertainty, and market volatility, with a record number of SPACs potentially set to expire next year.
In the America, 41 deals took place in Q2 2022, with US$2.5b raised in terms of proceeds, which was a 73% drop in deals and a 95% decline in proceeds YOY. APAC saw 181 IPO deals, and US$23.3b in proceeds, a 37% volume drop, and a 42% proceeds decline YOY. The EMEIA region also witnessed difficulties, with 83 deals and US$14.8b in proceeds recorded, a 62% and 44% YOY drop. In Asia specifically, China witnessed a drop in deals and proceeds by 36% and 16%. For Japan, it was down 31% and 84% for deals and proceeds.
As a result, investors are more reluctant to invest as freely as before, with many now focusing on fundamentals, such as free cash flows, rather than on projections.
However, hope remains. In China, the economy is expected to bounce back in Q3 thanks to the easing of pandemic restrictions and new stabilisation policies, which will increase investor sentiment.
EY Asia-Pacific IPO Leader, Ringo Choi, noted:
“(But) a series of positive economic developments and new government policies in China should result in renewed optimism and a revival in IPO activity across the Asia-Pacific region for the remainder of the year.”
🎯So what is the outlook for Q3 2022, and what does this mean for job and internship seekers? Though it may seem bleak at the moment, all hope is not lost! Numerous mega IPOs were postponed this year, meaning they’re set to make their debut when market conditions improve. Both the tech and energy sectors will continue to remain strong, especially energy as more financial institutions continue to explore ESG. New deals are expected to emerge from this area. As awareness of climate change grows, businesses utilising ESG policies will become more attractive to investors, especially in the long run. It’s important to stay positive. Rebounds and declines go hand-in-hand and it’s a matter of us finding ways to adapt, such as by considering options like companies looking into renewable energies and sustainability.
What do you think? Do you have any thoughts on the declining IPO market? Let us know in the comments!
Hit 👍 if you found this #IPO article insightful!
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