Global IPO Market Overview: Trends and Insights from 2024
The global Initial Public Offering (IPO) landscape experienced a notable shift in 2024, with overall volumes declining by 10% and proceeds down by 4% year-over-year (YOY). Despite these reductions, the market demonstrated resilience, with a total of 1,215 deals generating approximately US$121.2 billion in proceeds. This article delves into the key trends and regional performances that shaped the IPO market in 2024, as highlighted in the EY Global IPO Trends report.
A Closer Look at Global Performance
The IPO market in 2024 saw a stronger performance in the latter half of the year compared to the first half. The fourth quarter, in particular, outperformed the preceding three quarters, indicating a potential recovery trend. India emerged as a surprising leader in IPO volume, surpassing the United States for the first time by listing nearly twice as many IPOs. In contrast, the U.S. reclaimed its position as the top market for IPO proceeds, a significant achievement since its peak in 2021.
The U.S. stock market’s valuation reached unprecedented levels, making it an attractive destination for global investors. Notably, 55% of U.S. public listings in 2024 were from foreign issuers, showcasing the market’s international appeal. Meanwhile, the Chinese mainland faced its lowest IPO activity in a decade, primarily due to tightened regulations that stifled new listings. Australia also experienced a sharp decline in IPO volume, marking its most significant drop in over 20 years. Conversely, Malaysia achieved a remarkable milestone, recording a 19-year high in IPO numbers, driven by increased interest in its market valuation and liquidity.
The Role of Private Equity and Venture Capital
Private equity (PE) and venture capital (VC) firms played a crucial role in the IPO landscape of 2024, contributing to 46% of total global IPO proceeds. This underscores the importance of these investment vehicles in shaping the market. Out of the 20 mega IPOs recorded, 12 were backed by PE, a significant increase from just two in the previous year. Additionally, 18 unicorn IPOs were launched, with half of them stemming from VC firms, a notable rise from only three in 2023.
The technology, media, and telecommunications (TMT) sectors, along with industrials and consumer sectors, dominated the IPO scene, collectively accounting for approximately 60% of all IPOs by both number and proceeds. This trend highlights the ongoing investor interest in sectors that drive innovation and growth.
Regional Performance Insights
The EMEIA (Europe, Middle East, India, and Africa) region emerged as a leader in both IPO volume and proceeds, with 522 deals raising US$53.2 billion. This region contributed six of the top ten largest public offerings, with a significant portion being PE- or VC-backed. The Americas also saw a resurgence, achieving its highest IPO activity since 2021, with 205 IPOs raising US$33.1 billion.
In stark contrast, the Asia-Pacific region continued its downward trajectory, experiencing a 35% decline in deals and a 51% drop in proceeds YOY. However, the second half of the year showed improved performance compared to the first half, suggesting a potential stabilization in the region.
Emerging Trends: AI and Crypto
The rise of artificial intelligence (AI) companies has captured the attention of investors, with over 600 AI-related public companies currently in existence. Nearly half of these have gone public in the past four years, many with VC backing. Approximately 60 AI companies are in the process of IPO registration, with more than 400 in the pipeline, indicating sustained investor interest in AI-driven innovations.
Additionally, the approval of Bitcoin and Ethereum exchange-traded funds (ETFs) in the U.S. has bolstered the legitimacy of digital assets, enhancing access for institutional investors and improving market liquidity. This development may pave the way for a wave of IPO filings from crypto-focused firms, although success will depend on navigating regulatory challenges.
The Impact of the U.S. Election on IPO Activity
Historically, IPO activity tends to rise in the years following U.S. presidential elections, regardless of the party in power. The uncertainty leading up to an election often dampens market sentiment, but post-election clarity regarding policy direction typically stabilizes the market, creating a more favorable environment for IPOs. Sectors such as industrials, TMT, and financials often see early movers in the post-election year, although growth is generally observed across all sectors.
Looking Ahead: The 2025 Outlook
As we look toward 2025, several mega trends are reshaping the global IPO market. Shifting fiscal and monetary policies, geopolitical tensions, and new environmental, social, and governance (ESG) priorities are all influencing market dynamics. Despite these challenges, the IPO market is poised for a strong performance in 2025, supported by a cautiously optimistic economic environment and favorable monetary policies.
George Chan, EY Global IPO Leader, emphasizes the importance of funding for business transformation, stating, “An IPO offers a powerful avenue to raise the capital needed to drive growth and innovation.” With a robust pipeline of companies across various sectors eager to capitalize on renewed market strength, the outlook for the IPO market remains increasingly optimistic.
In conclusion, while 2024 presented challenges for the global IPO market, it also showcased resilience and adaptability. As companies navigate the evolving landscape, the interplay of regional dynamics, sector specialization, and investor interest will continue to shape the future of IPOs in the years to come.