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Global IPO market experiences significant slowdown in Q1 2022

Global IPO market experiences significant slowdown in Q1 2022
PR Newswire
LONDON, March 30, 2022

Q1 2022 global IPO volumes fell 37%, with proceeds down by 51% year-on-year (YOY)This was despite the strongest January in 21 years by proceedsAsia-Pac…

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Global IPO market experiences significant slowdown in Q1 2022

PR Newswire

  • Q1 2022 global IPO volumes fell 37%, with proceeds down by 51% year-on-year (YOY)

  • This was despite the strongest January in 21 years by proceeds

  • Asia-Pacific accounted for 78% of global IPO proceeds due to mega IPOs

LONDON, March 30, 2022 /PRNewswire/ -- After record-high levels of global IPO activity in 2021, volatile market conditions have resulted in a significant slowdown during the first quarter of 2022. The year started off strongly, continuing the momentum of Q4 2021, with January producing the strongest opening month in 21 years by proceeds. However, by the second half of the quarter, worldwide stock market declines shifted the trajectory dramatically in the opposite direction, resulting in a significant drop in overall activity. For Q1 2022, the global IPO market saw 321 deals raising US$54.4b in proceeds, a decrease of 37% and 51% YOY, respectively.

The sudden reversal can be attributed to a range of issues, both emerging and residual. These include the rise in geopolitical tensions; stock market volatility; price correction in over-valued stocks from recent IPOs; growing concerns about a rise in the commodity and energy prices; impact of inflation and potential interest rate hikes; as well as the COVID-19 pandemic risk continuing to hold back a full global economic recovery.

In line with the sharp decline in global IPO activity there was a considerable fall in cross-border, unicorn, mega (proceeds above US$1b) and SPAC IPOs. There were also a number of IPO launches postponed due to market uncertainty and instability. These and other findings were published today by the EY organization.

Overall regional performance

IPO activity in the Americas region completed 37 deals in Q1 2022 raising US$2.4b in proceeds, a decline of 72% in the number of deals and a 95% fall in proceeds YOY. The Asia-Pacific region recorded 188 IPOs raising US$42.7b in proceeds, a decline YOY of 16% for volume, but an increase of 18% in proceeds. EMEIA market IPO activity in Q1 2022 reported 96 deals and raised US$9.3b in proceeds, a decline YOY of 38% and 68%, respectively.

Paul Go, EY Global IPO Leader, says:

"A decrease in IPO activity was not unexpected when compared with Q1 2021 as the latter was the most active quarter in the last 21 years. However, the market shock from geopolitical tensions and other economic concerns in the second half of the quarter created volatility and impacted the capital markets. While markets continue to be volatile, and uncertainties on economic recovery remain for reasons including continuing concerns around COVID-19, there is a risk that IPO activity will continue to slow further with IPO candidates choosing to postpone their transactions. Companies need to be well prepared to access the market when the window opens, likely for a shorter timeframe, and include a careful review of business models and preparation of alternative fund-raising plans."

Americas IPO markets pale in comparison to Q1 2021

IPO activity in the Americas region weakened this quarter in comparison to the record- breaking Q1 2021, with deals down 72% (37 IPOs) and proceeds falling by 95% (US$2.4b). Health and life sciences led the number of deals while a single large deal drove financials to lead by proceeds. In the Americas, the materials sector followed by number of deals, driven solely by the smaller Canadian exchanges (CSE and TSX-V), while health and life sciences ranked second by proceeds.

The pace of SPAC IPOs and mergers slowed amid challenging market conditions. Activity is expected to pick up as the year progresses because more than a quarter of the 600+ active SPACs expire later this year and more than 60% expire in the first half of 2023.

Brazil's IPO market ground to a halt in 2022 as dozens of companies cancelled or postponed deals. Volatility in the Brazilian market is expected to continue with elevated inflation and interest rates, and a fragile fiscal position, coupled with upcoming elections and consequences from geopolitical tensions.  

Rachel Gerring, EY Americas IPO Leader, says:

"This year continues to test the resiliency and agility of companies looking to go public. With increased volatility in the markets and uncertainties surrounding geopolitical crises, oil prices and inflation, there is increased focus on public company readiness to give companies the flexibility to capitalize when market conditions are optimal."

Asia-Pacific IPO proceeds rose 18% in Q1 2022 benefiting from mega IPOs

The Asia-Pacific region started the year strongly with an 18% rise in proceeds YOY, despite a 16% decline by deal numbers in Q1 2022. Four of the seven mega IPOs in Q1 2022 globally were listed in this region, including two of Q1's largest IPOs by proceeds. The region saw 188 IPOs raising US$42.7b in proceeds, surpassing Q1 2021 which had raised the highest Q1 proceeds in 21 years. In terms of sector activity, industrials led by volume (40 IPOs, US$3.3b), followed by materials (37 IPOs, US$5.3b), while energy and telecommunications led by proceeds (US$11.2b via 8 IPOs and US$8.5b via 3 IPOs, respectively).

Greater China saw a 28% decline in deals (97) and a modest 2% rise in proceeds (which raised US$30.1b) YOY. Hong Kong saw notably slower IPO activity due to recent market volatility, a severe outbreak of Omicron cases and a relatively bigger fall in the local stock market indices. While Mainland China also saw a small decline in deal numbers, proceeds rose YOY due to hosting three of the seven mega IPOs in Q1 2022.

After the largest number of IPOs seen in 2021, Japan's IPO activity slowed in Q1 2022, with a number of small cap IPOs coming to the market. Overall Japan saw 15 IPOs raise US$0.2b in total proceeds.

South Korea carried its strong IPO momentum from 2021 into January 2022, with Korea Exchange's largest ever IPO raising US$10.7b. IPO activity was slower in February, prior to South Korea's presidential election in March. In Q1 2022, Korea saw 19 IPOs with total proceeds of US$11.2b, a 21% decline in deal numbers but a 368% rise by proceeds.

Ringo Choi, EY Asia-Pacific IPO Leader, says:

"In many parts of Asia-Pacific, the COVID-19 pandemic is still impacting the economy and IPO activity. There is, however, optimism of more IPO activity to come in the second half of the year. The IPO markets remain receptive to high-quality companies as governments and Central Banks continue to support economic growth and liquidity. Due to recent geopolitical and regulatory changes, IPO candidates are recommended to have a plan B in place to explore more ways to secure investors from different geographies."

EMEIA's IPO market affected by market volatility

Recent elevated market volatility from geopolitical tensions unsurprisingly impacted EMEIA equity markets and subsequent corporate activity. Many IPO candidates in the region postponed their IPOs until a clearer picture emerges on the economic outlook. Overall EMEIA saw 96 IPOs, a decline of 38% YOY, proceeds raised were US$9.3b, a 68% decline YOY. On a more positive note, the global financial markets remain open and functioning despite the continued uncertainty.

In the first quarter of 2022, Europe accounted for 15% of global IPO deals and only 5% by proceeds. Two European exchanges were among the top 12 exchanges by deal numbers and by proceeds raised. Deal numbers in Europe were 47 with proceeds of US$2.7b raised. In the UK, the slower pace of IPO activity was due to a dip in investor confidence from Q4 2021 that carried into 2022. Q1 2022 saw eight IPOs in the UK with total proceeds of US$113m, a YOY decline of 60% by deal number and a dramatic 99% fall by proceeds.

Dr. Martin Steinbach, EY EMEIA IPO Leader, says:

"The current geopolitical tensions and widespread uncertainty in many EMEIA equity markets are forcing IPO dealmakers to look at alternative options or to consider delaying their IPO until calmer waters arise. We have already seen a number of IPO postponements in the short-term which has resulted in a quiet first quarter of this year. It remains challenging for companies to determine the right timing and alternative strategies that provide access to funding for further growth. IPO candidates should continue to prepare and keep all options open."

Shift in sector performance

The first quarter saw some slight shifts in sector performance partly due to the changing economic environment and market conditions. Both the technology and materials sectors led by number of IPOs with 58 each, raising US$9.9b and US$5.9b, respectively. This was followed by industrials (57 IPOs raising US$5b). Technology continued its dominance by deal numbers for the seventh consecutive quarter (since Q3 2020) but ranked second by proceeds – breaking a streak of seven consecutive quarters raising the highest IPO proceeds since Q2 2020.

In Q1 2022, energy took the lead in terms of proceeds (US$12.2b via 15 IPOs), driven by Q1's largest IPO on the Korea Exchange, while telecommunications came third (US$8.6b via six IPOs) due to Q1's second largest IPO on the Shanghai Stock Exchange.

Q2 2022 outlook: use the pause to re-examine your business in face of the unprecedented challenges

Paul Go says: "As many uncertainties remain, the market will remain volatile with a backlog of IPO candidates and pipelines will continue to build up. With the prevailing headwinds arising from geopolitical tensions and conflicts, inflation and interest rate hikes, it will be imperative for IPO-bound companies to take a fresh look at how these challenges will affect their markets, customers and suppliers to their business."

Notes to Editors

About EY

EY exists to build a better working world, helping to create long-term value for clients, people and society and build trust in the capital markets.  

Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate.  

Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today. 

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com. 

This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients. 

About EY Private

As Advisors to the ambitious™, EY Private professionals possess the experience and passion to support private businesses and their owners in unlocking the full potential of their ambitions. EY Private teams offer distinct insights born from the long EY history of working with business owners and entrepreneurs. These teams support the full spectrum of private enterprises including private capital managers and investors and the portfolio businesses they fund, business owners, family businesses, family offices and entrepreneurs. Visit ey.com/private

About EY Initial Public Offering Services

Going public is a transformative milestone in an organization's journey. As the industry-leading advisor in initial public offering (IPO) services, EY teams advise ambitious organizations around the world and helps equip them for IPO success. EY teams serve as trusted business advisors guiding companies from start to completion, strategically positioning businesses to achieve their goals over short windows of opportunity and preparing companies for their next chapter in the public eye. ey.com/ipo

About the data

The data presented here and available on ey.com/ipo/trends is from EY and Dealogic. Q1 2022 (i.e., January–March) is based on completed IPOs from 1 January 2022 to 23 March and expected IPOs by the end of March 2022. Data as of close of business 23 March UK time. All data contained in this document is sourced from Dealogic, CB Insights, Crunchbase, SPAC Insider and EY unless otherwise noted. Special purpose acquisition company (SPAC) IPOs are excluded in all data included in this report, except where indicated. 

First quarter IPO activity

Month/Quarter 

Number of

IPOs

Proceeds

(US$b)

January 2020

77

$9.8

February 2020

81

$11.8

March 2020

83

$7.0

Q1 2020

241

$28.6

January 2021

117

$28.7

February 2021

171

$36.0

March 2021

224

$47.3

Q1 2021

512

$112.0

January 2022

98

$31.9

February 2022

107

$10.3

March 2022

116

$12.2

Q1 2022

321

$54.4

Source: EY, Dealogic

Appendix: January 2022 – March 2022 global IPOs by sector

Sectors 

Number of

IPOs 

Percentage of

global IPOs 

Proceeds

(US$b) 

Percentage of

global capital

raised 

Consumer products 

21

6.5%

0.5

0.9%

Consumer staples 

20

6.2%

2.2

4.0%

Energy 

15

4.7%

12.2

22.4%

Financials 

6

1.9%

1.7

3.1%

Health and life sciences

49

15.3%

5.3

9.8%

Industrials 

57

17.8%

5.0

9.3%

Materials 

58

18.0%

5.9

10.9%

Media and entertainment 

6

1.9%

0.4

0.7%

Real estate 

14

4.4%

0.5

0.9%

Retail 

11

3.4%

2.2

4.0%

Technology 

58

18.0%

9.9

18.2%

Telecommunications 

6

1.9%

8.6

15.8%

Global total 

321

100.0%

54.4

100.0%

Source: EY, Dealogic 

Figures may not total 100% due to rounding. 

Vicki Conybeer
EY Global Media Relations
+44 7870 632 196
vicki.conybeer@uk.ey.com

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Survey Shows Declining Concerns Among Americans About COVID-19

Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat"…

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Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat" to the health of the US population - a sharp decline from a high of 67% in July 2020.

(SARMDY/Shutterstock)

What's more, the Pew Research Center survey conducted from Feb. 7 to Feb. 11 showed that just 10% of Americans are concerned that they will  catch the disease and require hospitalization.

"This data represents a low ebb of public concern about the virus that reached its height in the summer and fall of 2020, when as many as two-thirds of Americans viewed COVID-19 as a major threat to public health," reads the report, which was published March 7.

According to the survey, half of the participants understand the significance of researchers and healthcare providers in understanding and treating long COVID - however 27% of participants consider this issue less important, while 22% of Americans are unaware of long COVID.

What's more, while Democrats were far more worried than Republicans in the past, that gap has narrowed significantly.

"In the pandemic’s first year, Democrats were routinely about 40 points more likely than Republicans to view the coronavirus as a major threat to the health of the U.S. population. This gap has waned as overall levels of concern have fallen," reads the report.

More via the Epoch Times;

The survey found that three in ten Democrats under 50 have received an updated COVID-19 vaccine, compared with 66 percent of Democrats ages 65 and older.

Moreover, 66 percent of Democrats ages 65 and older have received the updated COVID-19 vaccine, while only 24 percent of Republicans ages 65 and older have done so.

“This 42-point partisan gap is much wider now than at other points since the start of the outbreak. For instance, in August 2021, 93 percent of older Democrats and 78 percent of older Republicans said they had received all the shots needed to be fully vaccinated (a 15-point gap),” it noted.

COVID-19 No Longer an Emergency

The U.S. Centers for Disease Control and Prevention (CDC) recently issued its updated recommendations for the virus, which no longer require people to stay home for five days after testing positive for COVID-19.

The updated guidance recommends that people who contracted a respiratory virus stay home, and they can resume normal activities when their symptoms improve overall and their fever subsides for 24 hours without medication.

“We still must use the commonsense solutions we know work to protect ourselves and others from serious illness from respiratory viruses, this includes vaccination, treatment, and staying home when we get sick,” CDC director Dr. Mandy Cohen said in a statement.

The CDC said that while the virus remains a threat, it is now less likely to cause severe illness because of widespread immunity and improved tools to prevent and treat the disease.

Importantly, states and countries that have already adjusted recommended isolation times have not seen increased hospitalizations or deaths related to COVID-19,” it stated.

The federal government suspended its free at-home COVID-19 test program on March 8, according to a website set up by the government, following a decrease in COVID-19-related hospitalizations.

According to the CDC, hospitalization rates for COVID-19 and influenza diseases remain “elevated” but are decreasing in some parts of the United States.

Tyler Durden Sun, 03/10/2024 - 22:45

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Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”

Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…

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Rand Paul Teases Senate GOP Leader Run - Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86. 

So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip. 

Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...

...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each. 

Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse. 

Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:   

In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”

Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act

Rand Paul amid his 10 1/2 hour filibuster in 2015

Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."   

Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support: 

In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience. 

That may be his strongest endorsement yet. 

Tyler Durden Sun, 03/10/2024 - 20:25

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Government

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While “Waiting” For Deporation, Asylum

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several…

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The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several months we've pointed out that there has  been zero job creation for native-born workers since the summer of 2018...

... and that since Joe Biden was sworn into office, most of the post-pandemic job gains the administration continuously brags about have gone foreign-born (read immigrants, mostly illegal ones) workers.

And while the left might find this data almost as verboten as FBI crime statistics - as it directly supports the so-called "great replacement theory" we're not supposed to discuss - it also coincides with record numbers of illegal crossings into the United States under Biden.

In short, the Biden administration opened the floodgates, 10 million illegal immigrants poured into the country, and most of the post-pandemic "jobs recovery" went to foreign-born workers, of which illegal immigrants represent the largest chunk.

Asylum seekers from Venezuela await work permits on June 28, 2023 (via the Chicago Tribune)

'But Tyler, illegal immigrants can't possibly work in the United States whilst awaiting their asylum hearings,' one might hear from the peanut gallery. On the contrary: ever since Biden reversed a key aspect of Trump's labor policies, all illegal immigrants - even those awaiting deportation proceedings - have been given carte blanche to work while awaiting said proceedings for up to five years...

... something which even Elon Musk was shocked to learn.

Which leads us to another question: recall that the primary concern for the Biden admin for much of 2022 and 2023 was soaring prices, i.e., relentless inflation in general, and rising wages in particular, which in turn prompted even Goldman to admit two years ago that the diabolical wage-price spiral had been unleashed in the US (diabolical, because nothing absent a major economic shock, read recession or depression, can short-circuit it once it is in place).

Well, there is one other thing that can break the wage-price spiral loop: a flood of ultra-cheap illegal immigrant workers. But don't take our word for it: here is Fed Chair Jerome Powell himself during his February 60 Minutes interview:

PELLEY: Why was immigration important?

POWELL: Because, you know, immigrants come in, and they tend to work at a rate that is at or above that for non-immigrants. Immigrants who come to the country tend to be in the workforce at a slightly higher level than native Americans do. But that's largely because of the age difference. They tend to skew younger.

PELLEY: Why is immigration so important to the economy?

POWELL: Well, first of all, immigration policy is not the Fed's job. The immigration policy of the United States is really important and really much under discussion right now, and that's none of our business. We don't set immigration policy. We don't comment on it.

I will say, over time, though, the U.S. economy has benefited from immigration. And, frankly, just in the last, year a big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era.

PELLEY: The country needed the workers.

POWELL: It did. And so, that's what's been happening.

Translation: Immigrants work hard, and Americans are lazy. But much more importantly, since illegal immigrants will work for any pay, and since Biden's Department of Homeland Security, via its Citizenship and Immigration Services Agency, has made it so illegal immigrants can work in the US perfectly legally for up to 5 years (if not more), one can argue that the flood of illegals through the southern border has been the primary reason why inflation - or rather mostly wage inflation, that all too critical component of the wage-price spiral  - has moderated in in the past year, when the US labor market suddenly found itself flooded with millions of perfectly eligible workers, who just also happen to be illegal immigrants and thus have zero wage bargaining options.

None of this is to suggest that the relentless flood of immigrants into the US is not also driven by voting and census concerns - something Elon Musk has been pounding the table on in recent weeks, and has gone so far to call it "the biggest corruption of American democracy in the 21st century", but in retrospect, one can also argue that the only modest success the Biden admin has had in the past year - namely bringing inflation down from a torrid 9% annual rate to "only" 3% - has also been due to the millions of illegals he's imported into the country.

We would be remiss if we didn't also note that this so often carries catastrophic short-term consequences for the social fabric of the country (the Laken Riley fiasco being only the latest example), not to mention the far more dire long-term consequences for the future of the US - chief among them the trillions of dollars in debt the US will need to incur to pay for all those new illegal immigrants Democrat voters and low-paid workers. This is on top of the labor revolution that will kick in once AI leads to mass layoffs among high-paying, white-collar jobs, after which all those newly laid off native-born workers hoping to trade down to lower paying (if available) jobs will discover that hardened criminals from Honduras or Guatemala have already taken them, all thanks to Joe Biden.

Tyler Durden Sun, 03/10/2024 - 19:15

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