Global IPO launches sank by 45% in 2022 as rate hikes and geopolitical tensions kept companies away

• IPOs worldwide sharply fell in 2022 amid a volatile market environment with interest rates and inflation flying higher.
• Global IPO volumes fell 45% to 1,333 launches, according to consultancy firm EY.

Scorching inflation, ramped-up interest rates, and Russia's invasion of Ukraine in 2022 slammed into initial public offerings worldwide this year, and companies appear to be tentative about launches in 2023, according to consultancy firm EY.

Global IPO volumes slumped by 45% on a year-over-year basis to 1,333, the company said in a report released late last week. Proceeds raised this year slid 61% to $179.5 billion.

In the fourth quarter, 334 IPOs came to markets worldwide and logged proceeds of $31.9 billion, the lowest amount of launches and proceeds in more than 10 years.

The declines comes after a record-breaking 2021 when shares of 2,436 companies began publicly trading.

"A record year for IPOs in 2021 gave way to increasing volatility from rising geopolitical tensions, inflation and aggressive interest rate hikes," Paul Go, EY Global IPO leader, said in the report.

Unfavorable market conditions and the "dismal performance of many IPOs listed since 2021," also hurt the IPO market this year, EY said.

Central banks worldwide have kicked up borrowing costs to pull down inflation rates that have burst well above their targets. Among them, the European Central Bank pulled its benchmark rate out of negative territory as inflation hovers around 10%, and the Federal Reserve delivered 425 basis points worth of rate increases over a 10-month span.

The technology sector remained in the lead in terms of 2022 volume, at 23% of the total with 310 deals. But the energy sector boomed this year, accounting for 22% of proceeds — up from 6% a year ago — at $39.9 billion. Russia's war in Ukraine in February sparked an energy supply shock, leading to a jump in energy prices and a surge in inflation.

"This, however, also created a more favourable IPO window for the energy companies to go public, thus boosting IPO activities in the Middle East, China and some ASEAN countries," said EY.

Meanwhile, US-China tensions and government regulations, along with a slowdown in the US capital market, significantly halted the flow of Chinese companies listing on US exchanges, said EY. That resulted in cross-border IPO activities sinking 61% from 2021.

In the Americas, IPO volume fell by 76% to 130, and proceeds plunged by 95% to $9 billion. The Nasdaq exchange had 81 IPOs, the New York Stock Exchange had nine, and the Toronto Stock Exchange had 13.

Corebridge Financial on the NYSE was the largest in terms of proceeds, at $1.7 billion. The company formerly known as AIG Life & Retirement began trading in September.

More than 160 companies withdrew IPOs during the 2002 calendar year, according to Stockanalysis.com.

In 2023, IPO activity will likely "remain somber through at least the first quarter," followed by a potentially strong pipeline by the second half of the year, said EY.

"As pipeline continues to build, many companies are waiting for the right time to revive their IPO plans," said Go. "Still, with tightening market liquidity, investors are more risk-averse and favor companies that can demonstrate resilient business models in profitability and cash flows, while clearly articulating their ESG agendas."