The second half of 2022 saw the number of initial public offerings (IPOs) drop significantly, with just 28 listings between July and December compared to 59 in the first half of the year.

The latest HLB Mann Judd IPO Watch Australia Report analysed IPO activity over the past 12 months on a number of key metrics, including listing volumes, share price performance, industry spread and overall trends, as well as a review of the pipeline for the remainder of 2023.

As a result of the drop in the second half of the year, the total number of IPOs in 2022 was down 54 per cent on the previous year (87 in 2022 compared to 191 in 2021), with the volatility in the broader market significantly impacting the IPO market.

Macroeconomic and geopolitical issues, coupled with rising inflation, resulted in the RBA lifting interest rates for the first time in twelve years, significantly impacting the stock market and subsequently IPOs.

The first half of 2022 recorded a healthy level of IPO activity, with 59 new listings, however the second half of the year saw the IPO market all but dry up.

As a result, the amounts raised through IPOs fell 91 per cent in 2022, with just $1.07 billion raised compared to the record-breaking amount raised in 2021 of $12.33 billion. The amounts raised were also significantly below 2020 ($4.98 billion) and 2019 ($6.91 billion).

Consistent with the trend seen in previous years, weaker market conditions resulted in the IPO market being dominated by small cap companies. Typically, during periods of market volatility, large cap companies avoid a public listing while small cap companies continue to come to market.

Of the 87 listings during the year, 78 were small cap companies (those companies with a market capitalisation less than $100 million), representing 90 per cent of the total number of listings. In contrast, small caps made up 76 per cent of 2021 listings and 58 per cent of 2020 listings.

Small cap entrants raised 54 per cent of total funds in the year, a considerably higher portion of total funds than the 11 per cent contributed by small caps in 2021.

The ongoing market volatility is unquestionably impacting on the current pipeline of IPO activity, with any improvement dependent upon a reduction in the macroeconomic and geopolitical factors impacting markets.