Tech IPO Market Faces Worst Year Since Global Financial Crisis

Sept 29 (Reuters) – U.S. tech initial public offerings have plunged to their lowest level since the 2008 global financial crisis. Stock market volatility, sharp inflation and rising interest rates have exacerbated investor sentiment towards new listings.

Only 14 tech companies have gone public on the stock exchange so far this year, compared to 12 in 2009, according to Refinitiv data. This year’s IPO raised him $507 million.

Compared to last year, total IPO volume decreased by 90.4% in the first nine months of this year.

Analysts interviewed by Reuters said plummeting stock market valuations are discouraging technology companies from pursuing stock market launches.

The S&P Information Technology Index is trading at 20.18 forward price-to-earnings, its lowest level since April 2020.

“Institutional investors are changing their capital allocation while retail investors are licking their wounds,” said James Gellert, CEO of Rapid Ratings.

“This is a terrifying backdrop for IPOs, especially technology IPOs that rely on bull markets and momentum investors to boost market entry.”

The Renaissance IPO Index, which captures the largest and most liquid U.S. IPOs, is down 50.4% this year, compared to a 23% drop in the S&P 500 Index.

Shares of Corebridge Financial Inc (CRBG.N), which launched the largest US IPO this year, were trading about 4% below Wednesday’s asking price of $21.

Ernst & Young’s US IPO leader Rachel Gerring said the poor aftermarket performance of 2021 IPOs has dampened investor appetite for new stocks.

“Technology has been significantly impacted by declining valuations across the market. There will be significant funding across the sector throughout 2021 to provide tech IPO hopefuls with the opportunity to navigate this period of volatility in the market. It gave us the capital we needed to survive,” said Gerring.

Greek yogurt maker Chobani pulled back on plans for a U.S. IPO earlier this month, while several other big companies, including Reddit and ServiceTitan, have postponed plans to go public this year.read more

In the US, sectors such as finance and healthcare were among the most promising areas for IPOs, followed by energy and power.

Jennifer Post, partner at Thompson Coburn, said energy markets remain active due to disruptions in global supply and distribution channels, and the adoption of electric vehicles is also driving trade.

“These areas should be IPO candidates in 2023. With capital investment urgency more pressing, commercial and consumer demand growth should remain strong,” said Post. .

Reported by Patturaja Murugaboopathy and Gaurav Dogra, Bengaluru.Edited by Anirvan Sen, William McLean

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