After a record year for IPOs in 2021, the market for initial public offerings (IPO) cooled significantly this year. Yet Switzerland has been able to buck the trend.
The Swiss stock exchange listed more companies than London and Amsterdam this year, while a recent EY study shows that globally the number of IPOs fell 45 percent from 2021, which was a record year for IPOs.
The fourth quarter of 2022 was the weakest fourth quarter in more than 10 years, both in terms of numbers and proceeds, Tobias Meyer, head of transaction accounting and IPO services at EY in Switzerland said in the firm’s report.
Yet, in Switzerland, the stock exchange SIX Group recorded 13 additions this year with a total volume of more than 3.8 billion Swiss francs ($4.1 billion), with 2.26 billion francs coming in the fourth quarter.
The increase is due to a program launched by SIX and approved by the financial regulator Finma in July this year, allowing Chinese companies to list global depository receipts (GDRs) on the Swiss exchange.
In 2022, significantly more companies went public on the Swiss stock exchange than in 2021, in particular, due to GDR listings by Chinese companies, Meyer is quoted as saying.
However, the Chinese listings have failed to attract European investors, or even Western banks at scale, as reports. Chinese banks are pitching these listings as arbitrage opportunities where they sell new stock listings in Zurich back to shareholders in China at a discount, the outlet wrote, quoting a BNP Paribas equities expert.
The expert also said that in future larger, more liquid offerings would transpire.
Yet, looking ahead globally, there are no signs of a change in sentiment on the IPO market due to the difficult market environment and geopolitical tensions, with EY’s study showing that companies were still holding back on their IPO plans.
Nonetheless with interest rate rises slowing and volatility declining, IPO activity could pick up in the second half of next year, Meyer said.
Citigroup investment bankers recently came to a similar conclusion, saying that the second half of next year could see an increase in IPO activity when pent-up deals materialize.