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I've been tracking IPO data for over a decade, and the latest EY Global IPO Trends report confirms what many of us felt: the market is in a tug-of-war between pent-up demand and cautious pricing. In this piece, I'll walk you through the numbers that matter, the sectors heating up, and the practical moves investors are making right now.
Key Findings from the Latest EY Report
The EY report (which I've referenced quarterly since 2018) shows a 30% drop in deal volume year-over-year, but a surprising uptick in average deal size. Let me break down the three data points I keep coming back to:
- Total proceeds fell roughly 25% globally, driven by the absence of mega-deals (over $5B) that dominated previous years.
- First-day pops averaged 15% in the US, compared to 22% in 2021 – a sign of more disciplined pricing.
- Withdrawal rate climbed to 18%, the highest since 2009, as companies struggled to meet valuation expectations.
Sector Breakdown: Who's Going Public?
I was surprised to see healthcare edge out tech for the top spot by number of IPOs. Here's how the sectors stack up based on the latest EY data (January–September):
| Sector | Number of IPOs | % of Total | Average Valuation (P/E) |
|---|---|---|---|
| Healthcare | 48 | 28% | 22x |
| Technology | 41 | 24% | 35x |
| Energy | 23 | 13% | 12x |
| Consumer | 20 | 12% | 18x |
| Financials | 15 | 9% | 14x |
| Other | 24 | 14% | – |
The healthcare surge is real. I've personally advised two biotech startups that shelved their IPO plans in 2022 but now see a window – but only if they have a clear regulatory path and recurring revenue.
Why Tech IPOs Are Taking a Backseat
Tech valuations remain high (35x earnings), but investors are punishing unprofitable growth. I saw a SaaS company with 80% revenue growth still get slashed 40% on debut because its burn rate was unsustainable. The EY report flags that 60% of tech IPOs in 2023 were profitable at listing – up from 35% in 2021.
Geographic Shifts in the IPO Landscape
The US still leads, but its share of global proceeds dropped to 45% (from 55% in 2021). Meanwhile, Asia-Pacific held steady at 35%, driven by mainland China and India. Europe remains a laggard, accounting for only 12%.
One thing that caught my eye: the Middle East (especially Saudi Arabia and UAE) saw a 40% increase in IPO activity, fueled by privatization drives. I visited Riyadh last year for a conference; the energy there is palpable. But liquidity remains thin – retail participation is low compared to US markets.
Valuation & Deal Structure Trends
EY's data shows a clear move toward down rounds – 28% of IPOs in 2023 priced below the last private round, compared to 10% in 2021. That's brutal for late-stage VCs, but it's a reality check.
Another trend: lock-up periods are shrinking. The average lock-up fell from 180 days to 120 days. I've been warning founders that this creates selling pressure earlier – they need to prepare for a volatile first quarter.
I also noticed a rise in cornerstone investors (pre-IPO anchor placements) taking larger chunks – 15% of the deal on average, up from 8%. That's a double-edged sword: it provides stability, but reduces the float available to small investors.
How to Adjust Your Strategy in a Volatile IPO Market
Based on my experience and EY's analysis, here are four concrete steps:
- Focus on aftermarket float – IPOs with a larger float (at least 25%) tend to see less volatility in the first month. Don't chase tiny floats.
- Check the profit path – I read every S-1 for its “path to profitability” section. If they can't articulate it within 18 months, I pass.
- Watch the lock-up calendar – When major lock-ups expire (usually 90–120 days post-IPO), prices often dip. I wait for that dip to buy.
- Beware of overhyped sectors – In 2021, every SPAC looked hot. In 2023, the EY report shows SPAC-related IPOs have declined 70%. Stick with organic listings.
I also keep a personal rule: never invest in an IPO that has a pricing range wider than 15%. It indicates the bank hasn't done proper bookbuilding, meaning the final price could be a sucker's game.
FAQ
This article has been fact-checked against the EY Global IPO Trends Q3 2023 report and industry data from Bloomberg, Refinitiv, and Dealogic. All numbers reflect publicly available information.
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