The global initial public offerings market has faced difficulties amid turmoil in the banking sector.
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Since the beginning of 2023, the companies have received $19.7 billion as a result of the initial public offering (IPO). This result is 70% lower than the figure recorded for the same period last year. Also, this amount is the lowest comparable level since 2019.
The largest drop was recorded in the United States. Local companies managed to attract only $3.2 billion. Problems in the banking sector have created uncertainty about the dynamics of interest rates.
Udhai Furtado, co-chairman of ECM in the Asia-Pacific region of Citigroup, says that interest rates are currently the main problem. He also announced active discussions about the duration of the strict policy of financial regulators in this direction and the possible change of these measures in the direction of weakening. Udhai Furtado stressed that so far there is no clarity as to when the IPO activity will begin to grow.
Companies that have already gone public are also experiencing difficulties, as evidenced by the dynamics of the FinTech IPO index in the United States. Last year, the index lost 51%. IPO financing dropped 68% over the same period.
Recently, the difficult situation has worsened. After the collapse of SVB, which provoked general unrest in the banking industry, and total uncertainty about the future of the financial sector, it became much more difficult for fintech firms to raise funds. Fintech companies that have gone public since 2020 are now trading 54% below the offer price.
Experts admit that at some point representatives of the fintech industry will have to change the concept of actions in the financial sphere to receive funds. This process will be difficult, as inflation and rising interest rates put additional pressure on profitability.
As we have reported earlier, Investment Banks Approach Monzo Over IPO.
