A turbulent 2022 brought a lot of uncertainty and geopolitical instability as markets had to cope with rising inflation, aggressive interest rate hikes, lockdowns in China, a war in Ukraine, and an energy crisis in Europe - all leading to recession fears. With that backdrop, the traditional IPO market in Europe and the UK remained largely closed. 2022 European IPO proceeds were down almost 80% compared to 2021, raising only €15.6bn vs. €75.0bn in the previous year.
Equity market performance and volatility
Whilst most of the major European indices recorded losses for 2022 despite a brief equity market rally in the second half of the year, the Stoxx 600 closed down 13% outperforming the S&P 500 that closed down 19%. From a European sector perspective, only the Energy and Basic Resources sector indices delivered positive 2022 performance being up 24% and 4% respectively. As a result, the energy and commodity heavy FTSE 100 index closed up 1% for the year despite a challenging macroeconomic backdrop. Volatility also remained elevated throughout the year with VSTOXX being mostly above 20 (a level that would support a healthy IPO market), halting traditional IPO activity.
European and UK IPO trends
The IPO markets in Europe and the UK remained largely closed throughout the year with IPO proceeds down almost 80% compared to 2021 and only 20 IPOs with over €100m raised. Whilst some issuers may attempt to tap the market later in H1 2023 using their full year results, most of the IPO pipeline is being pushed back into H2 2023 and beyond. With the higher cost of straight debt, convertible bonds and structured equity issuance is also expected to gain further momentum, building on its recent success in the fourth quarter.
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