The global IPO market remained resilient amid market volatility and geopolitical shifts during the third quarter, according to a new report from EY Global.
The quarter showed “signs of cautious optimism.” Despite volumes being down 14% at 310 and proceeds falling 35% to US$24.9 billion, Q3 outpaced the first two quarters of the year in IPO launches, the report showed.
For the first three quarters of 2024, both the Americas and Europe, the Middle East, India and Africa (EMEIA) regions saw a year-over-year increase in both the number of IPOs and proceeds.
Notably, EMEIA proceeds were up 45% compared to the same period in 2023.
A significant market value gap between the US and China was observed, with investors shifting focus towards more stable markets like the US and India. Despite recession concerns, the US market remains attractive, with a record-high market capitalization disparity compared to China.
Mega IPOs are showing signs of recovery, particularly in the Americas which included the standout US$5.1 billion IPO by Lineage, along with a resurgence in private equity-backed exits via IPOs.
Cross-border IPOs also gained momentum during Q3, with a 20% year-over-year increase in overseas listings, reflecting a growing trend of international companies opting for US markets due to better liquidity and valuations.
In the US since 2023, foreign-domiciled issuers accounted for 52% of IPOs on its exchanges, the highest in 20 years.
Additionally, AI companies continued to attract investor interest, with more than 60 companies going public per year for the last two years, and about half are achieving a profit.
About 50 AI companies are in the process of IPO registration of which about one-third are profitable, which signals sustained investor interest in AI innovations.
For the remainder of 2024, the IPO market is set to be influenced by central bank policies, geopolitical developments and election outcomes, EY's report noted.
Strong performance in key markets such as the US, Europe, and India is expected to boost IPO activity, with optimism driven by lower interest rates and easing inflation.
“As inflation and interest rates recede, other emerging factors are taking precedence in influencing IPO decisions,” EY Global IPO leader George Chan said in a statement.
“In this environment of heightened uncertainty, well-timed market entries and compelling equity narratives are crucial for businesses looking to capitalize on IPO opportunities.”