London IPO value drops 94% in first half of 2022

IPO activity on the London Stock Exchange’s main market and the Alternative Investment Market (AIM) saw a collective 45% decrease in deal numbers and a 94% drop in proceeds in the first half of 2022 compared to H1 of 2021, according to a report from EY.

Global IPO activity followed a similar path and fell in H1 2022, with a 47% decrease in deal numbers and a 59% drop in proceeds compared to H1 2021.

In London, 26 issuers raised only £595 million in the first half of 2022, compared to 47 issuers raising £9.4 billion in the same period a year before.

In the second quarter of 2022, the main UK market listed six IPOs which raised £192 million in total, whilst AIM saw just one admission, raising £6 million.

UK IPO performance during Q2 of 2022 contrasted starkly with the same period in 2021, when there were 12 IPOs on the main market and 13 on AIM, raising a combined total of £3.8 billion – a value 19 times higher year-on-year.

Scott McCubbin, EY UKI IPO Leader, said: “The London IPO market has experienced a very difficult start to 2022.

“There is a perfect storm of geopolitical pressure creating a challenging macroeconomic landscape, which are compounded by inflationary pressures focused on high energy and commodity prices leading to associated interest rates rises.

“We expect a weak IPO market for the remainder of 2022 due to these challenging conditions.

“However, the pipeline of IPOs is healthy, with a number of delayed IPOs because of the turbulent market conditions in the first half of the year.

“This provides a more positive medium to long-term outlook, although the timing of a rebound is hard to predict given the uncertain geopolitical and macroeconomic landscape.”

Global IPO markets reported 630 IPOs in H1 of 2022, raising $95.4 billion. EY said this represented a 58% valuation drop year-on-year and is 46% lower in terms of the number of IPOs.

Shanghai was the leading global exchange in terms of IPO proceeds in H1 0f 2022, hosting 69 IPOs and raising over $32.6 billion in the process, representing a 46% increase in proceeds when compared to the same period in 2021.