70% drop in global IPO market due to banking crisis

The risks of banking turmoil and recession are writing the prime crisis lines in the global IPO market, sending it in stasis, even after public investors begin to believe the worst of stocks is over.

This comes after the companies raised just $19.7 billion through initial public offerings in 2023, according to data compiled by Bloomberg and visualized by News Agency. This is a 70% year-on-year decline and the lowest similar amount since 2019.

The sharpest decline was recorded in the United States, where only $3.2 billion was raised. This idle activity follows a slowdown that began last year, when rising inflation led central banks to tighten aggressive policies and curb investors’ appetite for risk.

Troubles in the banking sector after the collapse of some medium-sized US lenders, Credit Suisse, have added to the uncertainty over the path of interest rates as the US Federal Reserve works to contain inflation by avoiding further difficulties.

“Interest is the number one issue, and there’s clear debate about how long the squeeze will last or change direction and quickly,” said Uday Furtado, co-head of Asia-Pacific equity markets at Citigroup.

“There are a number of things that people will need to see, including central bank management, to ascertain whether this is the second, third or fourth quarter,” he added, referring to the reopening of the IPO window.

Negotiations in suspended

Oldenburgische Landesbank AG, a German bank backed by companies of private equity, halted work on a planned IPO that was expected to take place as early as May due to investor concerns about the health of the global banking system, Bloomberg News reported Thursday.

“There is so much uncertainty about what will happen at the end of quest’year that’s making investors even more nervous,” said Stephanie Nevin, global portfolio manager by Ninety One. “This seems like an inconvenient time to invest capital in company we don’t know”.

While the positive point of questhe year was in the offers, relating to the secondary sale of shares of listed companies, which questyear they brought in $76 billion, up 48% from last year. This includes the sale of a stake in Post Bank Japan, which could rise to as much as 1.3 trillion yen ($9.9 billion), the largest sale of its kind in almost two years.

Shareholders and companies rushed to sell shares to capitalize on activity in stock markets at the start of the year and to secure funding in a context in growth. The high cost of debt also means that some companies are resorting to freeing up capital through public offerings to pay off debt and other financing needs.