Sept 29 (Reuters) – Initial public offerings by U.S. technology companies have fallen to their lowest levels since the 2008 global financial crisis as stock market volatility, rising inflation and hikes of interest rates have exacerbated investor sentiment towards the new quotations.
According to data from Refinitiv, just 14 tech companies have gone public so far this year, compared with 12 in 2009. This year’s IPOs have raised $507 million, the lowest amount ever it has been raised through contributions since 2000.
Total IPO volumes fell 90.4% in the first nine months of this year, compared to last year.
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Analysts interviewed by Reuters said a sharp drop in stock market valuations has deterred tech companies from going public.
The forward P/E (price-to-earnings) ratio for the S&P Information Technology Index was trading at 20.18, the lowest level since April 2020.
“Institutional investors have been shifting equity allocations while retail investors have been licking their wounds,” said James Gellert, CEO of Rapid Ratings.
“This is a dire backdrop for IPOs, particularly technology IPOs, which rely on bull markets and momentum investors to bolster their market entries.”
The Renaissance IPO Index, which tracks the largest and most liquid IPOs in the US, has fallen 50.4% this year, compared with the S&P 500’s 23% drop.
Shares of Corebridge Financial Inc ( CRBG.N ), which launched the biggest U.S. initial public offering this year, were trading about 4 percent below their $21 offer price on Wednesday.
Rachel Gerring, head of Americas IPOs at Ernst & Young, said the poor performance of the 2021 IPO aftermarket has dampened investor appetite for new shares.
“Tech has been disproportionately affected by falling valuations across the market. Throughout 2021 there was significant fundraising across the sector, providing would-be tech IPOs with much-needed capital to weather this volatile moment in the market,” Gerring said.
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In the US, sectors such as financials and healthcare were among the bright spots for IPOs, followed by power and energy.
Jennifer Post, partner at Thompson Coburn, said energy markets remain active due to disruptions in global supply and distribution channels, while the adoption of electric vehicles is also driving deals.
“These areas should see IPO candidates in 2023 as the urgency for capital investment becomes more pressing and growing business and consumer demand should remain strong,” Post said.
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Reporting by Patturaja Murugaboopathy and Gaurav Dogra in Bangalore; Editing by Anirban Sen, William Maclean
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