AFME is pleased to circulate its Equity Primary Markets and Trading Report for the first quarter of 2022 (Q1 2022).

The report provides an update on the performance of the equity market in Europe in activities such as primary issuance, Mergers and Acquisitions (M&A), equity liquidity structure, and market valuations.

Key findings:

• Equity underwriting on European exchanges declined 75% in Q1’22 compared to the same quarter of 2021. All forms of equity capital raising declined during the quarter. IPO activity was exceptionally weak, with a 91% decline compared to Q1’21.
  
  SPAC IPOs reached €0.8bn in Q1’22, representing 40% of total IPO volume (11% in 2021, 3% in 2020).
  
  The ongoing geopolitical tensions in Eastern Europe have generated stress on markets which may have prevented the continuation of a sequence of robust quarters for European equity capital raising. Prior to the Russian invasion of Ukraine, markets were already dealing with a number of negative factors, such as surging inflation, supply chain issues, and ongoing risks related to the COVID pandemic, which were affecting primary issuance and demand.
  
  Most recently, in April 2022, equity issuance has slightly recovered accumulating €9.3bn in proceeds during the month, almost exclusively from secondary offerings.
• Completed Mergers and Acquisitions (M&A) in Q1’22 exhibited a declined when measured as announced value (-29% YoY) and when measured as completed value (-5% YoY).
  
  De-SPACS represented 5% of the total M&A value announced during Q1’22, around the same proportion observed during 2021FY. 91% of the announced SPAC acquisitions were De-SPACs of US-headquartered SPACs.
• Average daily equity trading on European main markets and MTFs stood at €107.6bn in Q1’22, 18% above the observed in Q1’21.
• Double Volume Cap (DVC) update: The number of instruments suspended under the DVC has recently increased to 838 (644 in January 2022) with 62 new suspensions identified only in April 2022.
• European equity trading mix: According to BigXYT data, on-venue trading represented 77% of the total addressable liquidity in Q1’22. Volume traded off-venues, on systematic internalisers and pure OTC, represent the remaining 23% of the volume of the total addressable liquidity. The proportion of on-venue trading relative to total addressable liquidity has increased in the course of the year. This is likely due to market participants seeking immediacy of execution (as opposed to minimal price impact) during periods of heightened volatility.