How Have IPOs performed in 2022: Fluctuating market circumstances have caused a major decrease in IPO activity in the first trimester of 2022 after record-high activity levels in 2021. Statistics show that in 2021, 63 Indian companies made an initial public offering (IPO) and raised a total of 1.19 lakh from investors. So far, just 12 IPOs in 2022 have been issued in the Indian market.
Life Insurance Corp. is looking at a mid-May schedule for an offering expected to collect as much as 654 billion rupees ($8.5 billion) for the Indian government by March’s close. According to statistics published by Bloomberg, initial public offerings (IPOs) have resulted in the raising of around $65 billion throughout the globe so far in 2022.
This is a 70% decrease from the $219 billion raised in the first three months of the previous year. During the first quarter of 2022, the global initial public offering (IPO) market saw 321 transactions that raised US $54.4 billion in proceeds, representing a drop of 37% and 51%, respectively, year on year (YOY).
The abrupt turnaround may have been caused by several factors, some of which are new while others are more ingrained. This article tries to give an overview on How Have IPOs performed in 2022 so far.
EY, a global consulting firm, says that the rise in geopolitical tensions, the volatility of the stock market, price corrections in overvalued equities from recent IPOs, raising concerns about an increase in commodity and energy prices, the effect of inflation, and likely interest rate hikes, and the COVID-19 pandemic risk are all holding back a full economic recovery around the world.
In the first quarter of 2022, 37 agreements were completed, generating the US $2.4 billion, a 72 percent decrease in the number of deals, and an 89 percent decrease in the amount of money raised compared to the same period the previous year.
Area totaled 188, a reduction of 16% in volume but an 18% gain in total proceeds YOY. According to statistics gathered by EY, IPO activity in the EMEIA market in Q1 2022 registered 96 transactions and generated US $9.3 billion in proceeds, a decrease YOY of 38% and 68%, respectively.
So, let us dive into this article to learn more about How Have IPOs Performed in 2022. Continue reading for more information.
Forces that may Affect IPOs’ Performance in the Coming Months
Considering how bad IPOs have performed so far in 2022, one would expect that a recovery will happen. However, some forces may affect how IPOs perform in the coming months, and some of those forces are already at play.
The current volatility in the stock market is unwelcome news for IPO hopefuls. Since coming public, numerous IPOs have dropped significantly below their initial offer price. “The public markets are turbulent. “That correlates with fearing,” said Wharton’s David Hsu. In other words, “companies do not want to bet on the outcome of their float.”
Another concern, as cited by Wharton’s David Hsu, is the possibility of additional COVID variations and the prospect of increased interest and inflation rates. As a result of the conflict in Ukraine, some firms have already postponed or canceled their initial public offerings (IPOs).
Investors’ confidence in the IPO market has been rattled by recent SEC steps to restrict SPACs and the potential for future capital market restrictions. The SEC has suggested a series of measures to “level the playing field” between SPACs and regular IPOs, which have less stringent compliance needs. A 60-day consultation process has begun on the idea.
Shock Losses that May Await IPO Investors from New Listings
According to experts, the freshly listed companies are expected to suffer further losses in the months ahead. As a result of the fact that some of the firms that went public have not yet made a profit, the markets and investors may be even more dissatisfied with the profits those companies report over the next several months.
As a result of the interaction of a variety of macro variables, FIIs and DIIs do not know how much money IPO-bound firms or other businesses that are not yet publicly traded will make. This is according to Manoj Dalmia, the founder, and director of Proficient Equities Private. Noting that the earnings for the following quarters will be the turning point for market conditions for initial public offerings (IPO) and markets in general.
As companies like LIC, Delhivery, and Veranda Learning Solutions that had just gone public announced their profits for the March quarter, investors became even less optimistic.
During the March quarter, LIC’s net profit was Rs 2,409 crore, a decrease of 17 percent from the previous quarter. Both Delhivery and Veranda Learning Solutions said they had lost 119 crores and 20 crores, respectively.
Adani Wilmar was an exception in this regard. As a consequence of the conflict between Russia and Ukraine, the price of edible oil increased during the March quarter, which led to an increase in the company’s profit of forty percent. But this particular piece of news could hurt most other businesses in the same industry, which could mean less money, higher prices for raw materials, and other problems.
More than just the conflict in Ukraine, the lack of available funds is also affecting the values of firms with solid fundamentals; nevertheless, initial public offerings (IPOs) that were priced too high will continue to suffer even more once results are reported.
From this article, it is a no-brainer to see how poorly IPOs performed in 2022. Many investors will be hopeful, but it is a thin line between what to expect and if there will be any turns of events.
Global markets are all at the mercy of growing inflation, which brings about a decreased level of purchasing power. Many companies, including even startups, have started to lay off workers because of the current volatility in the market.
So, that’s all for today. We hope you liked our article on How Have IPOs performed in 2022, do let us know your views in the comment section below.
As to how IPOs will perform in the coming months, we think you already know the answer. Get more updates and keep yourself updated with the Fingrad blogs section.
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