Russia’s Nord Gold Plc on Tuesday pulled its IPO, citing market uncertainty and swings in the gold price, while Genworth Financial Inc. last month postponed a U.S. offering for its Enact Holdings Inc. mortgage-insurance unit. And Friday, Hong Kong-traded Geely Automobile Holdings Ltd. withdrew its application for a listing in Shanghai.
“There has been a certain level of exhaustion among investors and increased selectivity,” said Saadi Soudavar, co-head of equity capital markets for Europe, the Middle East and Africa at Deutsche Bank AG. “It’s a record year after all, so they can have their pick among the multiple transactions coming their way.”
Investor appetite for one type of listing has already faded. SPACs accounted for almost half the proceeds raised in the IPO market in the first quarter, but their share shrunk to about 13% this quarter.
An index that tracks SPAC listings has dropped 23% from a February high. The poor performance, along with tougher regulatory scrutiny has been a blow to market sentiment. U.S. officials have cautioned individual investors against celebrity-endorsed cash shells and are scrutinizing accounting practices.
Still, as long as the stock market is rising, the flow of IPOs is unlikely to dry up, and total proceeds this year are on track to eclipse the record of $420.1 billion set in 2007. The IPO boom will likely continue for the next six to 12 months, said Rob Leach, European head of equity capital markets at Jefferies Financial Group Inc.
Trading app Robinhood Markets Inc. has a U.S. offering in the works, while cloud-storage company OVHCloud plans to list in France and Volvo Cars is considering an IPO in Sweden. In the Middle East, Al Yah Satellite Communications Co. is also planning to list in what would be the first IPO on Abu Dhabi’s stock exchange since 2017.
“There is a degree of uncertainty about how long the party will keep going, but we expect to see a very busy third-quarter,” with a big pipeline of companies lining up to list after the summer, said Deutsche Bank’s Soudavar.
--With assistance from Salima Mouline and Julia Fioretti.
This article was provided by Bloomberg News.