Market for IPOs collapsed in 2022 – Recovery expected in the course of 2023

Hamburg, December 8, 2022 – In Germany, few companies went public in 2022 as during the financial crisis in 2009. The IPO of Dr. Ing. h.c. F. Porsche AG was the only one in the Prime Standard. In 2021, there were still twelve IPOs, of which three achieved emissions volumes in the billions. Nevertheless, the total issued volume increased by 6 percent to around 9.1 billion euros (2021: 8.6 billion euros). After the IPO of Deutsche Telekom, the Porsche IPO was the largest IPO ever conducted in Germany.
 

Klaus Rainer Kirchhoff, founder and Chairman of Kirchhoff Consult AG: “Although Porsche, as the hoped-for icebreaker, was very successful with a volume of over 9 billion euros on the stock exchange, the IPO year 2022 de facto collapsed after the start of the Russia-Ukraine war. The global political instability led to a slump in the stock markets. Weak economic growth, high inflation, and rising interest rates did not allow for an open IPO window. In addition, investors held back after strong losses in the issues of the previous year and are waiting for a more stable situation."

Porsche share up +25.8% since IPO

Since the IPO, Porsche shares have recorded a price increase of 25.8 percent (as of December 5, 2022) and have thus risen more strongly than the DAX 40, which gained 20.6 percent in the same period. However, since the beginning of the year, the DAX 40 has lost around 9.1 percent. At the year's low on September 29, the day of the Porsche IPO, the DAX was even down 24.6 percent. Overall, trading on the German stock markets was characterized by great volatility. With the start of the Russia-Ukraine war in February, stock prices fell significantly but recovered in March. In the following months, stock trading was dominated by globally lowered economic forecasts, high inflation, interest rate hikes by central banks, and high energy prices. Nevertheless, numerous German companies were able to raise their profit forecasts during the year. Since mid-October, the stock markets have been on a year-end rally.

Ev Digital Invest with a small IPO in the Scale segment

The uncertain situation also affected the Scale, the growth segment of the Deutsche Börse. In early May, EV Digital Invest AG managed the only IPO in this segment with a volume of 6.3 million euros. In the previous year, two companies raised a total of 137 million euros. Only the year 2019, when no company went public in this segment, was worse for this young segment.

Two SPACs raised a total of €353.8 million and were listed on the General Standard

In 2022, two more SPAC IPOs were carried out in the General Standard: SMG European Recovery SPAC SE and 468 SPAC II SE. The two shell companies raised a combined volume of €353.8 million (compared to €925 million in 2021) but have not found a suitable target for acquisition yet.

Three new listings in the Prime Standard and Scale

ADTRAN Holdings Inc. was listed in the Prime Standard, specializing in communication solutions and acquiring the listed ADVA Optical Networking SE. Additionally, the Cantourage Group SE (Cannabis) and Advanced Blockchain AG (Software) were listed in the Scale.

The market for new SME bonds experienced a significant decline

By the end of November, 13 new bonds had been issued, compared to 29 in the entire year of 2021. The total issuance volume amounted to €327.6 million, a decline of 76.6% (compared to €1.4 billion in 2021). More new issues may follow by the end of the year, but the previous year's level is unlikely to be reached. The percentage of fully placed bonds decreased significantly from the previous year to 46% (compared to 59% in 2021). Companies only reached 61.5% of their targeted volume, less than the previous year's 90%. The average coupon rate increased by 0.5 percentage points to 6.2%. Additionally, the real estate boom for bonds ended this year, with only two bonds coming from this sector, while bonds from the renewable energy sector had the highest representation with four issues.

An increase in IPO activities is expected in 2023

After numerous IPOs were postponed or canceled in the second half of 2021, this trend continued in 2022. Many of these companies are expected to take the opportunity to go public once a window opens up in the capital market. According to official information and market rumors, there is a long pipeline of candidates for IPOs in 2023, currently with around 100 potential issuers. These include FinTechs such as Solaris, spin-offs from corporations such as Ionos (web hosting, United Internet), and Thyssenkrupp Nucera (hydrogen, Thyssenkrupp), as well as companies in the renewable energy sector.

If the upward trend in stock prices continues and risks such as the Russia-Ukraine war, energy shortages, inflation, and rising interest rates are mitigated, the window for IPOs is likely to open again in 2023. Analysts predict that the DAX will rise to over 15,000 points by the end of 2023.

Under these conditions, Kirchhoff Consult expects a revival in IPO activities in 2023. In addition to private equity-driven issuances, Kirchhoff Consult also expects to see more small and medium-sized companies among the new listings.

Jens Hecht, CEO and Board Member of Kirchhoff Consult AG, said: "Investors have developed higher expectations for issues. In addition to demonstrating profitability or a plausible path to it, ESG criteria are increasingly coming into focus. Promising companies are already preparing intensively to use the next IPO window with a convincing equity story. Therefore, we expect at least 10 IPOs in 2023."