No halt for IPOs – despite the perceived standstill

The general feeling that there are hardly any listings at all nowadays is wrong. The number of listings and IPOs so far this year is on par with both 2019 and 2020, says Oskar Wollert of Carlsquare, citing new statistics.

In 2021, 243 listings and 209 IPOs were carried out on the Swedish stock markets, which were extreme figures compared to previous years. This is according to a compilation by Carlsquare.

The are several reasons for last year’s high numbers. Firstly, the stock markets have experienced years of strong growth which significantly increased interest among investors and companies. In addition, many successful listings, combined with the relative ease in attracting capital, resulted in more people wanting to try their luck and reap the benefits.

“On top of this, massive stimulus packages were pumped into the stock markets during the pandemic, which of course benefited the market,” Oskar Wollert, Vice President of Equity Capital Markets at Carlsquare, tells Realtid.

He explains that the feeling that there is a complete halt in the IPO market is a common perception since many of us tend to compare to the previous year.

“But if you look at how things looked in 2020 and 2019, and compare with this year, there are about the same, if not more, listings,” he says.

Concerns about a trend shift began back in the autumn of 2021 when worries of increasing inflation rates took off in October as oil prices continued to surge.

“You can spot the trend early where the risk is greatest. One early sign was the hundreds of SPACs listed in 2020 and 2021, that had obvious trouble in finding targets. Then, as Russia began mobilising troops outside Ukraine, concerns increased further. On top of that came reports of rising inflation and at the same time indications of increased interest rates. The consequences have probably not escaped anyone, not least in the tech segment,” says Oskar Wollert.

How smart is it to do an IPO right now?

“An IPO process takes time and usually requires a lot of preparation, strategic decisions and, not least, due diligence. The market will of course turn around eventually, the question is just when. If you feel that the benefits that can come from doing an IPO are attractive to your company, now is, without a doubt, a good time to start preparing. In this way, you can be early when the market turns. Valuations on the private side will also come down, so an IPO will always be an attractive option,” he says.

How much of an impact is the war in Ukraine having?

“The war has had a large impact; it shook the whole world and to some extent acted as a trigger for the tough situation we are in right now. The more short-term effects of the war were digested by the market relatively fast, but the long-term consequences have yet to come.”

Will there be a recession?

“That remains to be seen. Right now, we see central banks fighting tooth and nail to contain inflation. This isn’t the first time we’ve seen a major correction in the market. I think everyone somewhere felt that the favourable climate we have had in the stock market would at some point need to cool down. It doesn’t take much thought to realise that it makes a fair amount of sense from a longer-term perspective. On the other hand, we see that there is still strong capital in the market and that quality companies continue to attract substantial amounts of investment,” says Oskar Wollert.