IPO activity in Q1 of 2022 slowed by volatile market conditions

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IPO activity in Q1 of 2022 slowed by volatile market conditions

A report from the global accounting firm EY found that volatile market conditions have resulted in a significant slowdown during the first quarter of 2022, after record-breaking levels of IPO activity in 2021.

The report cites a range of issues, including geopolitical tensions, stock market volatility, price correction in over-valued stocks from recent IPOs, concerns about inflation and potential interest rate hikes, and COVID 19 induced lock down.

Adani Wilmar, Vedant Fashions and AGS Transact Technologies were the three largest Indian IPOs, with consumer products and retail being the most active sector, according to the report.

The IPO momentum of a blockbuster 2021 has not been carried over to 2022 so far. Sandip Khetan, partner and financial accounting Advisory Services Leader, EY India said that the timing is well off last year, as geopolitical uncertainty and other macro factors continue to affect investor sentiment.

The report expects to have a strong pipeline for IPOs in Q 2 2022, as 20 companies have filed their DRHPs in Q 1 of 2022 and plan to raise funds through the public market in the current calendar year.

In line with the sharp decline in global IPO activity, there was a significant fall in cross-border, unicorn, mega proceeds over $1 billion and SPAC IPOs. The report said that several IPO launches were postponed due to market uncertainty and instability.

Moreover. More than 10 companies have Unicorn status in the Q 1 of 2022, and EY suggests a robust activity in the private market. The report said that PE VC investments in 2022 are continuing to grow, with Jan-Feb 2022 investments $10.3 billion more than twice that of Jan-Feb 2021's $4.1 billion but 7.6 per cent less than the previous two month period Nov-Dec 2021, the previous two-month period.