IPO activity falls 45% in 2022 as higher rates crunch financial markets

It’s been a no good, very bad year for private companies eager to make their debuts on U.S. and global exchanges.

Through December 14, there have been just 1,333 initial public offerings worldwide in 2022 which collectively raised $179.5 billion, marking a 45% drop in listings raising 61% fewer dollars compared to 2021.

"Amid an environment defined by higher inflation and rising interest rates, investors have spurned new public companies and turned to less risky asset classes," said Paul Go, EY's global IPO leader, in a report published this week.

In the Americas, IPO activity in 2022 fell to levels unseen since the global financial crisis of 2008-2009.

This year saw only 130 IPOs raise $9 billion, a 13-year low by volume and 20-year low by value, per EY’s data. Those figures also represented declines of 76% and 95% from last year by volume and proceeds, respectively.

Still, IPO activity worldwide came in 16% higher than 2019 even with this year's fall from record levels. In 2021, more than 2,400 IPOs were completed, raising more than $450 billion.

"A record year for IPOs in 2021 gave way to increasing volatility from rising geopolitical tensions, inflation and aggressive interest rate hikes,” Go said. “Weakened stock markets, valuations and post-IPO performance have further deterred IPO investor sentiment."

Public offerings backed by financial sponsors like private equity firms saw a sharp drop, too, with the number of deals falling 77% while proceeds collapsed 93%.

The risk-off mood has also strained pipelines for mergers, with many special-purpose acquisition companies — or SPACs, which raise capital from investors in hopes of finding an acquisition target later — approaching their two-year window to find targets after launching in 2020.

Among notable names that have halted plans to go public this year is grocery delivery platform Instacart, which the New York Times reported earlier this year halted a planned IPO process. Instacart declined to comment on its IPO.