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How the Russia/Ukraine conflict is affecting global IPOs

18 March 2022 By Anthony Nguyen

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All prices in this article will be in USD unless otherwise stated.

The conflict between Russia and Ukraine and the prospect of central banks tightening policies has led to IPO hopefuls, from around the world, withdrawing their floats.

According to Dealogic, a record 25 IPOs have been withdrawn in the US. These companies had a potential value worth $6.1 billion. Their decision could have been a response to the 6% drop in the S&P500. The global monthly withdrawn tally has climbed to 54 companies valuing at $7.9 billion, this is the highest number in over a decade.

The trend continued into February as 31 global companies worth nearly $3.5 billion have cancelled their listing plans. In the first half of March, another nine companies worth $2 billion were added to the list.

The performances of recent listed companies have deterred other companies from their IPO float plans. The Goldman Sachs Liquid IPO Index has decreased by nearly 60% from last year’s highs. Last year saw an abundance of new IPOs.

Looking back at companies that were listed in 2021, a vast majority of them have unfortunately gone under.

Australia’s biggest float of 2021, GQG, is currently 24.62% below its offer price. In addition to this, Judo Bank and APM Human Service International are also down 18.14% and 16.52% from their initial listing prices, respectively.

A similar theme can be observed in relation to equity capital markets transactions with global businesses backing out of $3.4 billion in deals in January and a further $3.3 billion in February. This year’s figures are significantly higher than last year’s withdrawn figures of $649 million in January and $490 million in February.

The increasing number of companies withdrawing deals can be linked to the conflict between Russia and Ukraine. One key deal of note would be the postponement of SBI Sumishin Net Bank’s $1.2 billion float in Japan.

This market settlement has also reached our shores as Australian-listed companies cancel their raising plans.

Nickel Mines made an announcement last week that it had withdrawn its $13 million share purchase plan due to market volatility.  The company’s share price was in a freefall due to a short squeeze which propelled nickel prices briefly above $100,000 a tonne.

IGO has recently announced that it will delay the acquisition of Western Areas in response to the current nickel price volatility.

Telix Pharmaceuticals have also cancelled their share purchase plan due to the current market conditions.

Medibio have cancelled an underwriting agreement which was related to a $5.7 AUD million capital raising. This is a direct result of the “escalation of hostilities between Russia and Ukraine”.

All in all, the ongoing conflict between Russia and Ukraine has created chaos for the global markets. As a result of the rocky markets, a lot of companies have adapted their IPO strategies to give themselves the best chance of success.

If you would like to take this opportunity to invest in Australian companies mentioned above and don’t already have a trading account, you can register for a Shares or Shares CFD  account at GO Markets.

Source: GO Markets, Dealogic, Tradingview, Reuters, AFR

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