IPO Market Shows Signs of Life Amid Recession Fears Continue


(Bloomberg) — The global initial public offering market is booming, and the rebound in stock markets is causing companies to test investor appetite for new listings, especially in Asia. However, it seems that a full-fledged recovery is still ahead.

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Around $25 billion worth of IPOs were priced globally in March and April, according to data compiled by Bloomberg.

Analysts said issuers from Hong Kong to Milan saw a window of opportunity in lower market volatility. Activity was particularly strong in Asia, where regional exchanges accounted for nearly 80% of new share sales in April. was European listings have also recovered. But recession fears are deterring U.S. issuers, slowing any real recovery. Deal sizes are smaller on average, and the funding he has raised so far this year remains 51% below the same period last year.

“We’re starting to see a lot of activity, with companies resuming processes that have been put on hold, but the market is in the middle of nowhere,” said Jason Manketo, global co-head of the equity practice at law firm Linklaters. There is still considerable uncertainty: “The buy side would like to see several quarters of results before committing to an IPO. It means that

asian lead

Digging into the data, Asia is currently the most well-served region in the world. However, this year’s issuance is coming from a wider range of Asia, a significant change from 2022, when the majority of large deals were concentrated in mainland China.

Indonesia is the brightest spot with two debuting nickel producers burgeoning. Rakuten Bank, Ltd. surged after raising ¥83.3 billion ($623 million) in Japan’s largest IPO since 2018, but the pop came after the original price point was lowered. Also on Thursday, KKR & Co.-backed Chinese liquor company ZJLD Group Inc. set the biggest selling price in Hong Kong for 2023.

“The IPO market is slowly coming back,” said James Wang, co-head of equity capital markets for Asia ex-Japan at Goldman Sachs Group. But there are signs of a resurgence and renewed vigor.”

Awakening of Europe

The European IPO market is in a moribund state, with activity in 2023 down about 12% from the same period last year when listings were abruptly halted by Russia’s invasion of Ukraine.

Low IPO returns are a major deterrent for investors. Portfolio managers have been aggressively negotiating valuations and refusing to pay top dollar for unproven new companies. Moreover, the sudden meltdown of Credit Suisse Group AG, which sparked last month’s global market crash, has added to investor concerns over interest rates and inflation, further disrupting plans for a listing.

However, there are signs that the melancholy mood will clear up. Most notably, Lottomatica SpA, an Italian gambling company backed by Apollo Global Management Inc., launched its €600 million ($657 million) IPO last week, taking to European exchanges this year. became the third largest company in Additionally, his German web hosting company Ionos SE and electric motor parts maker EuroGroup Laminations SpA have raised more than $400 million for him in the region, although both stocks have struggled since their debut.

United States lagging behind

Still, the outlook for IPOs in the US remains grim. He raised just $4.1 billion this year by companies listed on U.S. exchanges, and his three companies, Nexttracker, Atlas Energy Solutions and Enlight Renewable Energy, account for a third of that amount. occupies

In fact, outside of that cluster and the 12 SPACs that debuted this year, the majority of new listings qualify as penny stocks.

“We are still in an uncertain world, and uncertainty is the worst thing for new issuance,” said Greg Martin, co-founder of Rainmaker Securities, which facilitates secondary trading for private companies. increase.

The outlook for Federal Reserve interest rates remains uncertain as evidence mounts that the US may be headed for recession.

Patrick Galley, CEO and CIO of RiverNorth Capital Management, said: “It’s important to have some clarity on interest rates.”

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