Stock listings in Europe have hit a ten-year low, with the number of initial public offerings down by around 80% in the second quarter of 2022 compared to the same period last year ( IPO), from 142 in Q2 2021 to 29 in Q2 2022, and a contraction of approx. 91% in terms of total gross IPO proceeds from €23.1 billion in Q2 2021 to €2.1 billion in Q2 2022.

This dramatic decline is closely correlated with deteriorating market conditions, and a rebound is only expected next year, according to the PwC IPO Watch Europe Q2 2022 report.

The second quarter of this year saw significant equity selling amid rapidly deteriorating market conditions, as well as rising interest rates, inflation and slowing economic growth, exacerbated by the military conflict in Ukraine and the blockades in China.

In the context of the volatility observed on the market but also of expectations regarding a recession, the capital markets were strongly affected and their main indices almost canceled, in the first half of 2022, the gains obtained from the last year, with the exception of the FTSE 100, a strong energy and raw materials index.

Many IPOs have been postponed or canceled and the outlook for the upcoming period is marked by a dose of uncertainty until the gap between investors’ and issuers’ views on capital market valuations narrows.

Thus, many market participants consider this context as a necessary reset of the (re)valuation of shares.

The report by PwC shows that a recovery to this market segment will most likely not happen until next year, although there are companies preparing for public listings and it is expected that there will be some limited attempts to access this segment in the second semester of 2022.

The largest IPO in Europe in Q2 2022 belonged to Industrie de Nora (listing at 474 million euros), an Italian producer of green hydrogen that propelled the Borsa Italiana to the first position in the top of the European stock exchanges, according to the value of the IPO- uri.

On the Nasdaq Nordic Stockholm stock exchange, 5 IPOs were registered (total 322 million euros), after which this stock exchange occupied the second position, being then followed by Euronext Paris also with 5 IPOs (total 305 million euros).

And globally, investment appetite in the IPO market remained fragile in the second quarter of 2022, with the number of listings hitting a five-year low.

Moreover, the dramatic drop in IPOs is very visible in Q2 2022 when only 232 listings (total IPO value of $36.6 billion) were successfully closed compared to the same period last year when there were 631 listings (cumulative value of $133.1 billion).

The largest IPO globally this quarter was the $6.1 billion Dubai Electricity and Water Authority (DWEA), which was priced on the Dubai financial market.

IPO Watch Europe analyzes all new primary market IPOs from the main stock markets and market segments in Europe (including stock exchanges in Austria, Belgium, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Serbia, Spain, Sweden, Switzerland, Turkey and United Kingdom) quarterly.

Author Sorin Petre, Partener PwC România