While IPOs attained a record-high level last year, with a low-interest-rate environment being a catalyst, surging market volatility and several macroeconomic headwinds contributed to the significant slowdown in IPOs during the first quarter of 2022. According to Connecticut-based IPO investment management and research firm Renaissance Capital LLC, less than 20 U.S. companies have entered since the start of the year. Also, the SEC has now proposed new policies that could remove the advantages of special purpose acquisition company (SPAC) mergers over traditional IPOs, and hence more uncertainty prevails for private companies who are aiming to debut this year.
Moreover, geopolitical issues, rising inflation, Fed’s aggressive interest rate hikes, and rising energy prices have led to a sharp decline in the number of IPOs so far this year. In addition, these factors have caused immense market volatility and resulted in a significant price slump for companies that marked their market debut last year.
