The global market for initial public offerings is showing signs of life as a rebound in the stock market has emboldened companies to test investor appetite for new listings, particularly in Asia. But a full-fledged recovery looks distant.
About $25 billion worth of IPOs priced globally in March and April, nearly twice the amount seen in the first two months of the year when listings virtually ground to a halt, according to data compiled by Bloomberg.
Issuers from Hong Kong to Milan saw a window of opportunity with the decline in market volatility, according to analysts.
Activity was particularly buoyant in Asia, where regional exchanges accounted for nearly 80 per cent of new share sales in April.
Listings in Europe also picked up.
But concern about a recession has deterred US issuers, slowing a full-fledged recovery.
Deal sizes on average were smaller, and the money raised so far this year remains 51 per cent below the same period last year.
“We are beginning to see green shoots of activity with companies restarting processes that were on hold, but there is still a fair degree of uncertainty in the market,” said Jason Manketo, global co-head of law firm Linklaters’ equities practice.
“The buy side is keen to see results for a couple of quarters before committing to an IPO. This means the potential pipeline of some 2023 deals has been moved out to 2024.”
Drilling down into the data, Asia is handily the busiest area for offerings in the world right now. But in a key change compared to 2022 — when the vast majority of large-sized deals were concentrated in mainland China — issuance is coming from a broader area of Asia this year.
Indonesia has been the brightest spot with a pair of nickel producers surging in their debut.
Rakuten Bank soared after raising 83.3 billion yen ($623 million) in Japan’s largest IPO since 2018 — though, the pop came after the initial price range had been cut. And KKR-backed Chinese liquor company ZJLD Group on Thursday priced Hong Kong’s largest offering of 2023.
“The IPO market is coming back gradually and slowly. It is not 100 per cent back yet, but there are signs of life and renewed vigour,” said James Wang, co-head of equity capital markets at Goldman Sachs Group in Asia, excluding Japan.
Europe’s IPO market has been moribund, with 2023 activity down about 12 per cent from the same period last year when Russia’s invasion of Ukraine brought listings to a screeching halt.
Poor IPO returns have been a major deterrent for investors. Portfolio managers have been driving hard bargains on valuations and refusing to pay top dollar for new, unproven companies.
Plus, the sudden meltdown of Credit Suisse Group, which ignited a global market rout last month, has added to investor worries about interest rates and inflation, further muddying listing plans.
But there have been signs of gloom lifting. Most notably, Lottomatica, the Italian gambling company backed by Apollo Global Management, opened books last week for a €600 million ($657 million) IPO, becoming the third large firm to tap European exchanges this year.
In addition, German web-hosting company Ionos and electric motor component maker EuroGroup Laminations have managed to raise more than $400 million in the region, though both stocks have struggled after making their debut.
Still, the outlook for IPOs in the US remains challenged. Only $4.1 billion has been raised for companies listing on US exchanges this year, with three — Nextracker, Atlas Energy Solutions and Enlight Renewable Energy — accounting for a third of that amount.
In fact, outside that cluster and a dozen special purpose acquisition companies that have made their debuts this year, the vast majority of new listings would be qualified as penny stocks.
“We’re still in an uncertain world and uncertainty is the worst thing for new issuances,” said Greg Martin, co-founder of Rainmaker Securities, which enables secondary transactions for private companies.
Evidence is mounting the US may be headed towards a recession and the US Federal Reserve’s path forward on interest rates remains unclear.
“How do you price a deal when you don’t know what the cost of capital really should be on a forward-looking basis,” said Patrick Galley, chief executive and chief investment officer of RiverNorth Capital Management.
“Some clarity over interest rates is key.”
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
About Takalam
Date started: early 2020
Founders: Khawla Hammad and Inas Abu Shashieh
Based: Abu Dhabi
Sector: HealthTech and wellness
Number of staff: 4
Funding to date: Bootstrapped
Results
2pm: Al Sahel Contracting Company – Maiden (PA) Dh50,000 (Dirt) 1,200m; Winner: AF Mutakafel, Tadhg O’Shea (jockey), Ernst Oertel (trainer)
2.30pm: Dubai Real Estate Centre – Maiden (TB) Dh60,000 (D) 1,200m; Winner: El Baareq, Antonio Fresu, Rashed Bouresly
3pm: Shadwell – Rated Conditions (TB) Dh100,000 (D) 1,950m; Winner: Lost Eden, Andrea Atzeni, Doug Watson
3.30pm: Keeneland – Handicap (TB) Dh84,000 (D) 1,000m; Winner: Alkaraama, Dane O’Neill, Musabah Al Muhairi
4pm: Keeneland – Handicap (TB) Dh76,000 (D) 1,800m; Winner: Lady Snazz, Saif Al Balushi, Bhupat Seemar
4.30pm: Hive – Conditions (TB) Dh100,000 (D) 1,600m; Winner: Down On Da Bayou, Royston Ffrench, Salem bin Ghadayer
5pm: Dubai Real Estate Centre – (TB) Handicap Dh64,000 (D) 1,600m; Winner: Lahmoom, Royston Ffrench, Salem bin Ghadayer
UAE currency: the story behind the money in your pockets
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
UAE currency: the story behind the money in your pockets
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
What are the main cyber security threats?
Cyber crime - This includes fraud, impersonation, scams and deepfake technology, tactics that are increasingly targeting infrastructure and exploiting human vulnerabilities.
Cyber terrorism - Social media platforms are used to spread radical ideologies, misinformation and disinformation, often with the aim of disrupting critical infrastructure such as power grids.
Cyber warfare - Shaped by geopolitical tension, hostile actors seek to infiltrate and compromise national infrastructure, using one country’s systems as a springboard to launch attacks on others.
Sheikh Zayed's poem
When it is unveiled at Abu Dhabi Art, the Standing Tall exhibition will appear as an interplay of poetry and art. The 100 scarves are 100 fragments surrounding five, figurative, female sculptures, and both sculptures and scarves are hand-embroidered by a group of refugee women artisans, who used the Palestinian cross-stitch embroidery art of tatreez. Fragments of Sheikh Zayed’s poem Your Love is Ruling My Heart, written in Arabic as a love poem to his nation, are embroidered onto both the sculptures and the scarves. Here is the English translation.
Your love is ruling over my heart
Your love is ruling over my heart, even a mountain can’t bear all of it
Woe for my heart of such a love, if it befell it and made it its home
You came on me like a gleaming sun, you are the cure for my soul of its sickness
Be lenient on me, oh tender one, and have mercy on who because of you is in ruins
You are like the Ajeed Al-reem [leader of the gazelle herd] for my country, the source of all of its knowledge
You waddle even when you stand still, with feet white like the blooming of the dates of the palm
Oh, who wishes to deprive me of sleep, the night has ended and I still have not seen you
You are the cure for my sickness and my support, you dried my throat up let me go and damp it
Help me, oh children of mine, for in his love my life will pass me by.
Remaining fixtures
Third-place-play-off: Portugal v Mexico, 4pm on Sunday
Final: Chile v Germany, 10pm on Sunday
Brief scores:
Toss: Sindhis, elected to field first
Pakhtoons 137-6 (10 ov)
Fletcher 68 not out; Cutting 2-14
Sindhis 129-8 (10 ov)
Perera 47; Sohail 2-18
UAE currency: the story behind the money in your pockets
'Doctor Strange in the Multiverse Of Madness'
Director: Sam Raimi
Cast: Benedict Cumberbatch, Elizabeth Olsen, Chiwetel Ejiofor, Benedict Wong, Xochitl Gomez, Michael Stuhlbarg and Rachel McAdams
Rating: 3/5
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THE BIO
Occupation: Specialised chief medical laboratory technologist
Age: 78
Favourite destination: Always Al Ain “Dar Al Zain”
Hobbies: his work - “ the thing which I am most passionate for and which occupied all my time in the morning and evening from 1963 to 2019”
Other hobbies: football
Favorite football club: Al Ain Sports Club
What is an FTO Designation?
FTO designations impose immigration restrictions on members of the organisation simply by virtue of their membership and triggers a criminal prohibition on knowingly providing material support or resources to the designated organisation as well as asset freezes.
It is a crime for a person in the United States or subject to the jurisdiction of the United States to knowingly provide “material support or resources” to or receive military-type training from or on behalf of a designated FTO.
Representatives and members of a designated FTO, if they are aliens, are inadmissible to and, in certain circumstances removable from, the United States.
Except as authorised by the Secretary of the Treasury, any US financial institution that becomes aware that it has possession of or control over funds in which an FTO or its agent has an interest must retain possession of or control over the funds and report the funds to the Treasury Department.
Source: US Department of State
