Primary equity issuance is poised for a recovery in 2023, as an expected decline in inflation and interest rates leads companies to brush off deals. Brazil likely will lead the pack, as well as natural resources producers from around the region.

After a sharp slowdown in initial public offerings and follow-on offers in 2022, Latin America’s primary equity issuance is on track to recover in 2023 on expectations of a decline in inflation and an end to the interest rate tightening cycle, analysts say.

“Activity in general in the capital markets is going to be much more active than in 2022,” says Facundo Vázquez, head of Latin America equity capital markets at Goldman Sachs in New York.

The region’s equity capital markets tanked in 2022, with only four IPOs fetching a total of $316 million, according to data from Refinitiv. That’s down from 51 deals for $13.1 billion in 2021 and even less than the $7 billion in the first year of the pandemic in 2020. Over the same period, follow-ons fared better at $13.5 billion, or 21% less than in the year-earlier period, the data show.

The decline came as global economic conditions soured. Inflation surged, led by increased demand and supply-chain disruptions as the world economy recovered from the pandemic lockdowns. The Ukraine war added to the increase in inflation, stoking a surge in global interest rates that has damped economic activity and reduced investors’ appetites for risk. The result? A global selloff in equities.

In late 2022, however, inflation showed signs of peaking, bolstering expectations that interest rates could plateau in early 2023 to revive the appetite for equity in emerging markets.

Latin America likely will attract some of this investment, says Vázquez.

The region’s central banks, for the most part, acted aggressively by raising interest rates to tame inflation in 2022, a key to driving money back into the equity markets.

“If you anchor inflation expectations, that means that the currencies are going to do well, and if the currencies do well you are going to start to see equity,” says Vázquez.

Brazil cut interest rates to record lows in 2020 and 2021 at a time of a global excess of liquidity, which coupled with a strong local currency boosted demand for equity – and a total of 53 IPOs in 2021. While not so many IPOs are expected in 2023, it will be far better than the zero in 2022, he says.

We’re starting to see the pipeline to materialize.

facundo vázquez

“We’re starting to see the pipeline to materialize,” Vázquez says. “Companies are getting ready to file. The IPO pipeline is starting to move.”


He says that he wouldn’t be surprised if a few companies test the market early in Brazil. Indeed, Latin America’s largest economy could lead the region in IPOs again – even emerging markets on the whole – as the conditions for deals improve thanks to the country’s strong currency, good management of inflation and trouble-free transition to a new government. Brazil also produces many goods that the world needs, in particular energy, food and minerals.

Argentina could see a return to the market as well, led by energy and other natural resources producers, on expectations that a more conservative politician will win the October election, even as the economy struggles under nearly 100% inflation.

The end of the political election cycle in much of the region should also spur deals.

Mexico could see more IPOs as well, fueled by its strong currency and the expected growth in nearshoring, or sourcing businesses there to service the United States instead of farther away in Asia.

The hitch is to show investors that the company selling equity is focused on improving their businesses, says Alejandro Zecler, cofounder of Mexican financial technology firm Mendel.

Photo: Alejandro Zecler

Investors “want to see companies that can grow sustainably, with positive margins, that have a clear profitability,” he says. “That is what the market wants most today.” LF