China IPO flurry increases Asia’s share of listings

Initial public offerings (IPOs) have declined worldwide, including in Asia-Pacific (APAC), in 2022. However, due to a surge of activity on China’s exchanges, the APAC region has increased its share of new listings versus a year ago and now holds the majority of deals and funds raised globally, a recent report states.

The volume of global initial public offerings (IPOs) fell by 44% to 992 in the first nine months of 2022 compared to the same period in 2021, with a 57% reduction in proceeds to US$146 billion. In Asia, there were 608 IPOs, a 25% decrease from the previous year, and $100.8 billion in proceeds, a 22% decrease.

However, Asia solely houses 61% of all IPOs globally and 69% of all funds raised as of this point in 2022. This is a marked increase compared to the 46% of deals and 38% of funds recorded in 2021. Additionally, five of the top 10 IPOs to date have taken place in Asia.

The worldwide slowdown, according to analysts, is a result of escalating macroeconomic problems, market uncertainty, rising volatility, and declining global share prices.

“Many companies’ IPO plans were put on ice in early 2022,” said Paul Go, global IPO leader at EY. “Provided that market uncertainties and volatility subside, the launch of long-awaited blockbuster IPOs may reverse the sentiment.”

Mainland China’s government’s commitment to formulating and implementing enabling policies has fuelled IPO activity, raising Asia’s overall numbers in comparison to other regions. American exchanges suffered the biggest drop, with a 72% drop in deals to 116 and a 94% drop in proceeds to US$7.5 billion.

Shenzhen and Shanghai exchanges are placed first and second respectively in terms of the quantity of IPOs globally, with 148 and 119 deals. The trades in Shenzhen raised US$26 billion, while the deals in Shanghai raised US$47.5 billion, or 18% and 32% of the global total, respectively.

A minor rush of debuts in the third quarter signalled some rebound in Hong Kong’s battered IPO market, according to the research. This includes the two underwhelming IPO launches on Thursday from China Vanke’s Onewo property service business and electric car manufacturer Zhejiang Leapmotor.

“IPO activity in Hong Kong is expected to be stronger, despite being impacted by the US market volatility, the appreciation of US dollar and geopolitical risks,” said Terence Ho, Greater China IPO leader at EY.

Globally, technology businesses have so far this year launched the most initial public offerings. However, year over year, the average deal size decreased by 53% to US$123 million.

The largest deals were driven by the energy industry, which saw a year-over-year increase of 176%. Since the same period in 2016, the third quarter had the lowest proceeds from special-purpose acquisition companies (SPACs). SPACs often referred to as blank-cheque companies, are established to raise money and acquire assets in a condensed amount of time, typically 18 to 24 months.