Q1 2022 has been a challenging quarter for IPOs. The market sentiment deteriorated following a record breaking 2021 driven by continued concern of valuations at IPO, rising inflation, commodity prices and interest rates, and more recently exacerbated by the war in Ukraine. As a result, European IPO activity in Q1 2022 saw a significant decline in issuance with 28 IPOs raising €2.7bn compared to 89 IPOs in Q1 2021 raising €23.1bn.
Equity market performance and volatility
Following double digit gains of the equity markets in 2021, Q1 2022 was a difficult quarter to navigate due to continued concern of valuations at IPO, rising inflation and commodity prices, combined with expectations of tightening monetary policies. The war in Ukraine further weighed heavily on sentiment. As a result, the VSTOXX volatility index peaked at nearly 50 during Q1, leading to European and US indices finishing the quarter below 2021 year end levels. The FTSE 100, however, finished up 2% in Q1 on commodity stocks gains.
European and UK IPO trends
Q1 2022 IPO issuance in Europe totalled €2.7bn from 28 IPOs compared to €23.1bn from 89 IPOs in Q1 2021. Successful IPOs came from a range of sectors such as technology, green energy and industrials. As we noted in our earlier publications, pricing and post-IPO performance was front of mind for investors. Q1 also saw some activity in the SPAC market across various European exchanges including the London Stock Exchange.
The London IPO market slowed down significantly in Q1 2022 with only 10 IPOs raising £0.4bn compared to 21 IPOs raising £7.3bn in Q1 2021. New Energy One SPAC, targeting companies in the green energy sector, was the largest IPO on the LSE in Q1 this year raising £175m. The AIM market saw 6 IPOs this quarter with the largest being the £30m IPO of Clean Power Hydrogen.
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