The initial public offering slump of 2022 continued in the third quarter, as the 39 IPOs that raised a combined $3.1 billion is significant lower than the 199 IPOs in U.S. markets in Q3 2021, which raised a total of $49.7 billion, according to a new analysis from Audit Analytics. The amount raised in Q3 2022 is the smallest since the first quarter of 2016 when a combined $2.9 billion was raised.
Audit Analytics also noted that there have been steep drops in both traditional IPOs and IPOs through a special-purpose acquisition company (SPAC). Compared to Q3 2021, the number of traditional IPOs declined by 72%, and the number of SPAC IPOs declined by 91%. Based on the amount raised, traditional IPOs fell by 100%, and SPAC IPOs fell by 96% compared to last year’s third quarter.
What’s driving this down year for IPOs? CNBC noted that investors faced with high inflation and rising interest rates have ditched high-flying growth stocks and turned to safer, more profitable alternatives.
Rachel Gerring, IPO leader at EY Americas, told CNBC, “Investors are really risk averse at this moment, and that’s what’s really impacting the lack of activity that we’re seeing. They’re looking for companies that are focused more on growth and profitability as opposed to the growth at all costs that we were seeing in 2021.”
Regarding the huge decline in SPAC IPOs, Jay Ritter, IPO expert and University of Florida professor, told CNBC, “There are hundreds and hundreds of SPACs that are already public that are looking for a merger partner and any new SPAC IPO is going to be competing against those hundreds of other SPACs. So it makes no sense for a SPAC to be going public now rather than wait for a year until all this competition goes away.”
The only company to raise more than $1 billion at the time of its traditional IPO was Corebridge Financial, formerly known as AIG Life & Retirement, a Texas-based public company providing retirement solutions and insurance products. Corebridge Financial’s IPO was audited by PwC, according to Audit Analytics.
P. Dubs was one of 20 public accounting firms that audited the 39 IPOs in Q3, but it wasn’t one of the more busier firms. According to Audit Analytics, Friedman led with seven IPO clients, followed by BF Borgers and Marcum with four clients each. Friedman is now a part of Marcum, as the two got hitched on Sept. 1.
Including SPACs, the IPO audit client leaders for Q3 were:
Excluding SPACs, Friedman still led with five IPO clients. BF Borgers, Deloitte, Ziv Haft, and Grassi & Co. were the only other firms with multiple IPO clients, according to Audit Analytics.
Q3 2022 IPO Trends: Market Continues to Cool [Audit Analytics]