The Association for Financial Markets in Europe has released its latest Equity Primary Markets and Trading Report, saying that IPO activity across the continent has been at its lowest level since 2009.
The report says that the European sector saw IPOs accumulate EUR 1.3bn in deal value in the second quarter of the year, which was the lowest Q2 amount since the Great Financial Crisis. It also said that IPOs declined 42% in the quarter, representing the lowest amount since the same period.
European SPAC IPOs, the association said, have declined from a peak of €3.2bn in Q2 2021 to no deals in the first quarter of this year and only €0.9bn in Q2.
It also found that completed M&A activity declined 45% year on year in comparison between H1 2022 and H1 2023.
It wrote: “European M&A activity continued the gradual decline during Q2 2023 accumulating €160bn in deal value (from €289bn in Q2 2022). [There] was also a concurrent increase in announced M&A which, albeit below 2021-22 averages, anticipates a partial recovery in dealmaking for the coming months.”
It also noted: “The decline in inbound M&A (i.e., acquisition of a European company by a non-European company) has been particularly pronounced. Inbound M&A accumulated a total of €28bn in deal value in Q2’23, a 67% decline from Q2 2022. Domestic M&A also exhibited a large decline during the quarter accumulating a total of €105bn in deal value in Q2 2023, a 38% decline from Q2 2022.”
Regarding the raising of equity capital, the authors of the report said: “Equity capital raising on European exchanges totalled €26bn in Q2 2023, a minor 1% YoY increase compared to Q2 2022, and a 7% decline compared to Q1 2023. On a half-year basis, H1 2023 equity issuance rose 28% YoY on the back of stronger secondary offerings and a favourable low base (particularly in Q1 2022). IPOs accumulated €1.3bn in deal value in Q2 2023, a 37% decline from €2.1bn in Q2 2022 and the lowest Q2 amount since 2009.”
Interesting, AFME wrote that four sectors within Europe represented over four-fifths of all IPO proceeds. These were leisure and recreation, finance, computers and electronics, and telecommunications, with consumer products trailing a distant fifth.
AFME also wrote that SPAC IPOs have declined ‘significantly’ within the US and Europe.
It wrote: “In the US, SPAC IPOs totalled €1bn on 6 deals in Q2 2023 from a peak of €81bn on 298 deals in Q1 2021 and €1.9bn on 15 deals in Q2 2022. In Europe, SPAC IPOs have visibly declined from €3.2bn in Q2 2021 to no deals in Q1 2023 and €0.9bn in Q2 2023.”
