A report by consulting firm Ernst & Young (EY) has found that the global initial public offering (IPO) market in the third quarter of 2024 has modestly outpaced the previous two quarters, despite a dip in y-o-y volumes by 14% to 310 IPOs and proceeds by 35% to US$24.9 billion ($32.2 billion).
This has emerged amid a global economic slowdown, market volatility, geopolitical shifts and monetary easing.
Although the third quarter’s IPO activity has contended with heightened market volatility, the Americas and Europe, Middle East, India and Asia (EMEIA) demonstrated resilience in the first three quarters of 2024, with EMEIA's IPO proceeds up by 45% compared to the same period last year, helping to mitigate the global market's overall downturn.
Meanwhile, a persistently lower private equity (PE) and venture capital (VC) exit activity over recent years has created a growing backlog of portfolio companies poised for monetisation.
The report also finds that a resurgence in PE-backed mega IPOs and VC-backed unicorns is taking shape, as current valuation levels become more favourable for launching mature, high-value portfolio companies into the public market.
In the first nine months of 2024, PE and VC-backed IPOs made up six of the top 10 global IPOs, accounting for over one-third of the total global IPO proceeds. In the Americas specifically, these IPOs accounted for 52% of the total proceeds, signalling a greater willingness among PE and VC firms to exit the current IPO landscape.
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Cross-border listings have also seen a significant uptick. In the first three quarters of this year, 77 companies chose to list abroad, up from 64 in the same period last year, a 20% y-o-y increase.
Since 2023, foreign-domiciled issuers have represented approximately 52% of IPOs on US exchanges, reaching a 20-year high. Concurrently, a contrasting stock market performance between the US and China this year has pushed the market value gap between the two countries to reach a record high in the third quarter.
Americas and EMEIA rally as Asia-Pacific stabilises
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Year-to-date (ytd), the Americas and EMEIA have shown double-digit growth by both deal number and proceeds compared to the same period last year, despite a global reduction in public offerings owing to the Asia-Pacific’s (APAC) IPO pause in the first half of the year.
The US and India have notably maintained high levels of IPO activity, even during a typically quieter quarter. India launched over 100 IPOs in the third quarter, marking its highest level of public offerings in a single quarter over two decades.
The APAC region has made a notable turnaround in the third quarter. By overcoming earlier declines, the region has contributed to an 11% q-o-q increase in global IPO numbers. This rebound, marked by increased activity in mainland China, Indonesia, Malaysia and South Korea, has injected confidence into the global market during a period of heightened uncertainty.
Within the Asean region, ytd in 2024, a total of 94 IPOs raised US$2.5 billion, a noted decrease from 127 IPOs raising US$4.9 billion.
In the third quarter alone, there were 28 IPOs with proceeds totaling US$1.1 billion, representing a surge in proceeds of 100% from the previous quarter which saw 29 deals totaling US$0.6 billion.
This was primarily driven by the prominent listing of 99 Speed Mart Retail Holdings in Malaysia, which stood as the second-largest IPO in the region ytd in 2024. Across Asean, other active exchanges in the period include Indonesia with 34 IPOs raising US$0.3 billion, Thailand with 22 IPOs raising US$0.6 billion and lastly, the Philippines with 3 IPOs raising US$0.2 billion.
Singapore and Sri Lanka each had only one IPO that raised US$19.5 million and US$1.5 million respectively.
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EY Asean IPO Leader, Chan Yew Kiang says: “With interest rates easing and companies gearing up for growth in the region, IPO activities are expected to pick up in the next quarter and year ahead. Strong fundamentals and demands, together with regulators increasingly exploring policies to support growth companies to tap the capital markets for growth, also bodes well for the markets. We should also expect growing interest in cross-border listings as companies seek to achieve brand equity in other markets that they are venturing into.”
AI companies attract investor interest
Notably, over the past two years, more than 60 artificial intelligence (AI) companies have gone public annually, with around half turning a profit. Approximately 50 AI companies are currently in IPO registration, demonstrating sustained investor interest in AI-driven innovations.
IPO market outlook in the fourth quarter
The remainder of 2024 is expected to see the IPO market influenced by central bank policies, geopolitical developments and key election outcomes.
Optimism will be fueled by lower interest rates and easing inflation, which are likely to encourage new listings and a resurgence in sectors sensitive to borrowing costs. Strong performance in key markets such as the US, Europe and India is also expected to support IPO activity.
Similarly, cross-border listings should continue to thrive, and significant public debuts, especially those backed by PE firms and from spin-offs and carve-outs, are anticipated as they seek favourable public entry points.
EY Global IPO Leader, George Chan, concludes: “Investors are gearing up for a more volatile second half of 2024. As inflation and interest rates recede, other emerging factors are taking precedence in influencing IPO decisions. In this environment of heightened uncertainty, well-timed market entries and compelling equity narratives are crucial for businesses looking to capitalise on IPO opportunities.”
