- Europe and EMEIA the No.1 global IPO market for the first time since 2008 Financial Crisis, buoyed by large market debuts such a Puig in Spain and Galderma in Switzerland
- EMEIA IPOs up 46% and deal value up 89% in first half of 2024 compared to 2023
- Despite strong IPO performance in EMEIA and Americas, ongoing weakness in Asia-Pacific leading to overall reduction in global IPO volumes and value
- Significant jump in Private Equity and Venture Capital backed IPOs as investors seek exits
Dublin, 05 July 2024: IPO activity surged across EMEIA (Europe, the Middle East, India, and Africa) and the Americas in the first half of 2024, driven by favourable stock market performance, improving valuation levels, the continuing reduction in inflation and growing investor enthusiasm for new offerings, according to the latest EY Global IPO Trends Q2 2024 report. Enthusiasm for IPOs has seen their debuts eclipse benchmark stock index returns across almost all major markets, while there has also been a significant increase in Private Equity and Venture Capital backed IPOs as investors seek exits at more favourable valuations.
Europe and the wider EMEIA market enjoyed a very successful first half of the year and has become the number 1 global market for IPO activity for the first time since the global financial crisis in 2008. The region hosted 249 deals worth US$24 billion up 46% by volume and 89% by deal value when compared to the first half (H1) of 2023. Six of the top ten largest public offerings, five of them Private Equity-backed, originated in EMEIA. The two largest listings in the second quarter both involved European companies: Spain’s Puig Brands at US$2.9 billion, and Switzerland’s Galderma Group at US$2.6 billion.
In the Americas, there were 86 IPOs with proceeds of US$17.8 billion, an increase of 12% in volume and 67% in value when compared to the first half of 2023. The Asia Pacific region has witnessed a significant retrenchment, however, with deal volume down 43% and deal values reducing by 73%. Globally, there were 551 listings raising US$52.2 billion in capital during the first half of the year. This represents a 12% overall decrease in the number of IPOs and a 16% drop in proceeds raised year-on-year.
There was a leap in large Private Equity (PE) and Venture Capital (VC) backed IPOs, with the proportion of IPO proceeds from such offerings rising from just 9% in the first half of 2023 to 41% in H1 2024. This trend was particularly pronounced in the Americas, where 74% of the IPO proceeds were from PE and VC backed companies.
From a sectoral perspective, Industrials took the lead in a number of IPOs with 115 (21%) listings, primarily fuelled by strong activity in India. The Technology sector outperformed in terms of capital raised, amassing an impressive US$10.8 billion (21%) in IPO proceeds, with the US securing the largest amount of these funds.
Fergal McAleavey, EY Ireland Corporate Finance Partner, says: “The resurgence of IPO activity across Europe and the wider EMEIA region in 2024 is very positive to see after several challenging years. With inflation approaching ‘normal’ levels, interest rates falling, stock markets rallying to hit all-time highs and volatility remaining low, there is increasing confidence amongst IPO issuers and investors. We’ve seen IPO returns eclipse benchmark indexes globally for the year to date, with the average European IPO returning 17.7% while the STOXX Europe 600 returning just 6.8%. Not only is this a testament to increased activity and strong pricing, but it also bodes well for the pipeline of future activity with a number of high-profile listings potentially due in the coming months in Europe. A strong IPO market with strong post listing performance is a bellwether for the broader transaction market. The positivity that this bring to the market often leads to increased valuations across both the public and private market, more deal activity and generally adds confidence for companies and investors to transact.
“Globally, IPOs appear to have become a higher priority for Private Equity houses seeking profitable exits. Private Equity and Venture Capital backed IPOs may only account for 3% of IPO volume in EMEIA YTD, but they make up almost one-third of proceeds, thanks to several mega deals. PE and VC players are particularly enthusiastic about IPOs, especially for investments nearing maturity. Similarly, fast-growing, family-owned businesses are keen to fund further development, exemplified by Spain’s Puig, the largest IPO globally so far this year.
“Here in Ireland, IPO activity remains subdued, although the increasing vibrancy in European and American markets, together with interest rates cuts and desire from Private Equity and Venture Capital funds to secure an favourable exit could spur activity here in the domestic market.”
EMEIA and Americas post strong IPO performance while Asia-Pacific continues to slow
The EMEIA region made a remarkable comeback in the first half of 2024, accounting for 45% of total deal volume and 46% of value - its highest global share by number since the 2008 global financial crisis. This impressive performance was spurred by major European listings, indicating that larger companies perceive the current market condition as an optimal IPO window. India also experienced a significant surge, accounting for 27% (152) of global IPOs by deal volume, up from 13% (81) in the same period last year.
The Asia-Pacific region, once a hotbed for IPOs, has seen its market sentiment dampened by a confluence of headwinds, including geopolitical tensions, elections, economic slowdown, heightened interest rates and a drought in market liquidity, which led to investor caution. The region witnessed a prolonged slowdown in H1 2024, with a mere 216 IPOs listed and US$10.4b raised. This lacklustre performance represents a staggering decline of 43% and 73% by volume and value YOY, respectively. It is important to appreciate, however, that policymakers in China have set higher requirements on IPOs to improve the strength and the scale of companies choosing to go public.
The inexorable rise in AI is fuelling a technology boom, reflected in the surging DAX, ESTX and Nasdaq indices, again spelling good news for EMEIA IPO prospects and investors seeking strong valuations. AI is also disrupting non-technology sectors and enabling more efficient analyses of prospects, making the IPO process more attractive.”
H2 2024 IPO market outlook
According to the report, the second half of 2024 will be shaped by key factors affecting the global IPO market – the central banks’ interest rate cut schedules, escalating geopolitical tensions and the election super-cycle. The report predicts that global inflation will continue to cool amid varying economic conditions and regional inflation levels. The central bank’s easing cycle is likely to be disjointed with some European and emerging markets leading the way, ahead of a more hawkish US Federal Reserve (Fed). When central banks, including the Fed, reverse their course and start to lower interest rates, investors are expected to move their capital in search of higher returns. This shift is anticipated to increase liquidity in equity markets, emerging markets and growth-oriented sectors like technology and health and life sciences.
Fergal McAleavey says: “The global IPO market, like the markets in general, reflects the broader economic backdrop and geopolitical landscape at a given time. Companies contemplating IPOs need to show heightened adaptability to make well-informed strategic decisions based on economic, geopolitical and other factors. As we continue through 2024 we may yet see some companies postpone offerings to sidestep the unpredictable effects of electoral outcomes on market stability and investor confidence, preferring to await more stable post-election conditions."
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