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Q2 2022 Initial Public Offering Trends: 2022 Slowdown Continues

The number and size of initial public offerings (IPOs) continued to decline during the second quarter of 2022. There were 46 IPOs during Q2 that raised a combined $5.3 billion. This was the fewest IPOs since Q1 2020 (38) and smallest amount raised since Q1 2016 ($2.9 billion).

Both traditional and SPAC IPOs contributed to the decline. The number of traditional IPOs (including direct listings) declined by 75% from Q2 2021. And the number of SPAC IPOs declined by 79%. Based on the amount raised, traditional IPOs fell by 95% and SPAC IPOs fell by 84%.

Unicorns IPOs

Bright Green Corp [BGXX] was the only company to raise more than $1 billion at the time of its IPO. Bright Green Corp is a cannabis company located in Canada. The company began trading at about $16 per share on May 17, 2022 and traded at a high of $58 as of May 18th. In a sign of the depressed IPO market, Bright Green is now trading below $2.50 per share.

Auditor Market Share – All IPOs

There were 23 different firms that audited the 46 companies that IPOed during Q2 2022. Marcum led with 10 IPO clients followed by Friedman with 6 IPO clients. Marcum and Friedman announced in May that the firms planned to merge.

PricewaterhouseCoopers (PwC) and SRCO CPA were the only firms to have clients raise more than $1 billion during the quarter. SRCO CPA was Bright Green Corp’s audit firm.

Auditor Market Share – Excluding SPACs

When excluding SPACs, there were 21 firms that audited 30 companies. PwC and Marcum tied with four IPO clients each. Grant Thornton, Friedman and Manning Elliott were the only other firms with multiple IPO clients.

The decline in IPOs is likely to continue. The SPAC market is saturated with hundreds of SPACs still looking for targets. Notably, Bill Ackman’s high profile SPAC said they would return $4 billion to investors last week. Meanwhile, the S&P 500 is down about 20% year-to-date with fears of a recession on the horizon.

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