The year kicked off on a cautiously optimistic note, marked by a selective thaw following a quieter period. The Americas and EMEIA IPO markets had a bright start in 2024, increasing global proceeds. The Asia-Pacific region, however, started on a weak note, weighing down the overall global volume. For the first quarter of 2024, the global IPO market saw 287 deals raise US$23.7 billion, a 7% decrease but a 7% increase year- over-year (y-o-y), respectively. These and other findings are available in EY Global IPO Trends Q1 2024.
In Q1 2024, a majority of key IPO markets witnessed a significant number of newly issued IPOs whose current share prices surpassed their offer prices. This trend could indicate an improvement in valuations and pricing levels, reflecting growing confidence among issuers and investors.
An IPO is one of the pinnacle achievements for private equity (PE) firms, serving as a public showcase of their acumen and a defining milestone in their growth journey. In Q1 2024, approximately 10 PE-backed IPOs came to the market, five of which were featured among the top 10 global IPOs, a testament to their significant market presence.
The promise and reach of the artificial intelligence (AI) vertical is currently experiencing significant growth within the private realm, with the majority of AI and AI-associated businesses still in the seed or early stage of venture capital (VC) rounds. This suggests there could be a surge in IPOs in future years as these companies mature in the private domain before making their public debut.
The global IPO market has experienced significant shifts in geographical composition, driven by ongoing macroeconomic and geopolitical dynamics.
According to George Chan, EY Global IPO Leader, “As 2024 unfolds, participants in the IPO market are entering uncharted territory. IPO candidates are influenced by the recent pivot in investors’ preference toward proven profitability in an altered interest rate landscape, and are doing this while facing the intricate dynamics of an intensified geopolitical climate and the buzz around AI.”
To succeed in this shifting environment, IPO prospects must remain flexible and prepared to seize the right moment for their public debuts, Mr Chan says.
The IPO market thus far in 2024 has shown signs of vigour, with an upswing in IPO activity. Despite the restrained overall market activity in previous years, there is an uptick in enthusiasm from both IPO issuers and investors, hinting at shifting market dynamics and a more welcoming landscape for public listings.
The global economy will remain on a soft growth trajectory in 2024, with developed markets likely to see modest growth while emerging markets stay on a firmer growth path. Stock markets have already priced in the expectation of rate cuts in various major economies.
Just as investors and IPO candidates adapt to the new norm of higher interest rates and reduced liquidity, they will also need to navigate through additional layers of complexity in the geopolitical and global election landscape in the IPO market. As elections this year amplify uncertainty, IPO candidates will need to closely monitor election outcomes and assess how specific policies could affect stakeholder interests and re-evaluate IPO strategies and timing as necessary.
The data presented here are available at ey.com/ipo/trends. Q1 2024 refers to the first quarter of 2024 and covers completed IPOs from 1 January to 18 March 2024, plus expected IPOs by 31 March 2024 (forecasted as of 18 March 2024).
© 2024 Institute of Singapore Chartered Accountants