Asia had more IPOs than other regions in the first quarter of 2022, but the number fell from the fourth quarter of 2021
Sometime in 2021, the world has passed the milestone of 1,000 unicorns. This was captured by Crunchbase’s private unicorn board, which is dedicated to tracking startups with valuations over $1 billion; the list continued to grow and currently has 1,284 results.
One of the reasons that number keeps growing is that new unicorns are added to the list much faster than they are leaving it. In the ideal world of venture capital, more people would lose their unicorn status by going public. But that just hasn’t happened as often as it took to balance the unicorn birth rate that investors have funded.
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It’s not just SPACs that have fallen out of favor almost as quickly as they have flourished – the IPO market is once again gone. According to a recent EY report, a major IPO destination like London saw a major slowdown in listings this year. Global IPO deal volume declined 37% year-on-year in the first quarter.
However, there is one market where things are looking brighter: Asia.
Earlier this week, we wrote about the global IPO window not being completely closed in light of GoTo’s IPO on the Indonesia Stock Exchange (IDX). When you add in CB Insights data showing that Asia-based companies were responsible for nine of the top 10 IPOs in Q1 2022, it begs the question: Is Asia a haven for public exits? Let’s investigate.
First in difficult class
CB Insights’ venture trends report includes some interesting highlights about IPOs in Asia in the first quarter of 2022. With 91 public exits in the last quarter, Asia had more IPOs than any other region during the period. To emphasize that, Italian semiconductor company Technoprobe was the only non-Asian company among the largest publicly traded public fundraising company. The others were eight China-based companies and South Korean LG Energy Solution, which took pole position with its $98 billion exit valuation, CB Insights reports.
The context matters here: in the same period since late 2021, global IPOs have fallen into decline. According to CB Insights, there were only 143 IPOs worldwide in the first quarter of 2022, compared to 260 in the fourth quarter of 2021, a 45% decline on a quarterly basis.
The lack of IPOs was particularly significant in some regions. There were none in Africa or in Latin America, when Brazil, for example, hoped for an IPO bonanza just a few months ago. There were only four in Canada and five in Australia. In Europe and the US, there were 20 and 23, respectively, which pale in comparison to Asia’s total of 91 IPOs.
Does this mean that Asia was home to most of the world’s exits? No, because IPOs are just one of the liquidity routes available to late stage companies. If you factor in M&A and SPACs, the US had the largest share of global exits in the first quarter at 40%, followed by Europe’s 34%.
Unraveling the paradox
The fact that Asia had the most IPOs should not obscure another reality: IPOs declined there too. Certainly less than in other regions, but a 24% quarter-on-quarter decline is too big to ignore. The slowdown isn’t just compared to the fourth quarter of 2021: There were fewer IPOs in Asia last quarter than in any quarter of 2021. If you multiply the first quarter results by four to get a full-year projection generate 364, significantly less than the 2021 final count of 445 Asian IPOs.