In 2022 there were just 45 new issuers, a 62% decline from the record year of 119 in 2021, according to IPO Eye, a market tracker produced by Ernst & Young. The new listings raised £1.6bn, down from the £16.3bn raised in the previous year.
“2022 was a very difficult year for the UK IPO market, with the adverse macroeconomic and geopolitical environment leading to a relative pause in IPO activity towards the end of the year,” said Scott McCubbin, EY UKI IPO Leader.
The last three months of the year saw the main market hold nine IPOs and raise £380m, and the Alternative Investment Market with two IPOs raising £24m.
McCubbin also warned the coming year looks “uncertain” with the “continuation of prevailing headwinds” such as inflation, interest rates, energy prices and supply chain issues.
“However, there remains pent-up demand for IPOs, so we may see an upturn in the market in the second half of the year if we avoid further geopolitical shocks,” he added.
The downturn in the UK market was not unique, as globally IPOs dropped 45% in 2022. There were 1,333 IPOs raising $179.5bn.
Areas of success were the technology sector, which made up the biggest proportion of new companies on global exchanges at 23%, followed closely by the energy sector at 22%.
Asia-Pacific also dominated making up 63% and 69% of global IPOs in numbers and proceeds for the year. However, it is still over 25% behind in deal numbers compared to last year.
The Americas struggled the most, down 95% from 2021 figures in terms of IPO proceeds, followed by EMEA with a 78% drop.
“The Global IPO outlook remains difficult in the short-term. Investors have spurned new public companies and turned to less risky asset classes as they try to navigate higher inflation and rising interest rates,” added Debbie O’Hanlon, EY UKI private leader.
“As the pipeline continues to build, many companies are waiting for the right time to revive their IPO plans. However, with tightening market liquidity, investors are more risk averse and are looking to invest in companies that can demonstrate resilient business models in profitability and cash flows, while also articulating their ESG agendas.”