IPO’s have dramatically decline

In the Americas, during the quarter just completed (Q2, 2022), IPO’s raised only $2.5 billion.

During the same quarter, one year ago, IPO’s raised $49 billion.

That’s a decline of 95%.

The PDF link from EY contains a bunch of data for the statistical nerds.

Ultimately, it’s a reminder that when IPO’s are being offered in abundance (as they were throughout 2021), it’s a reasonably good signal that equity markets are nearing the end of its bull run.

Miraculously, a plethora of IPO’s coincides with above average prices or valuations.

Remember, that investment banks work for the seller (of the asset or the security). It is the seller that pays them to find buyers and in the latest wave of IPO’s the sellers of the shares were the incumbent owners.

Seldom did I see circumstances where new shares were being issued for the purpose of raising capital. Furthermore, many prospectuses showed that little cash was being retained for the corporation for “General Purposes”, instead funds often flowed to founders or private equity firms selling their stake.

Hint: Today, I don’t hear or see of many IPO’s coming to market.

July 3, 2022

by Rob Zdravevski


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