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Seventy-nine percentage expect that the Europe, Middle East, India and Africa (EMEIA) region will observe the highest growth in the number of IPOs during 2024 and 2025, followed by the Americas and Asia-Pacific (APAC) region. The responses are in line with what is being observed: EMEIA has shown a remarkable comeback, achieving its highest global share in the number of IPOs since the 2008 financial crisis, on the back of major European listings and strong activity in India. The Americas too have seen robust growth, with a notable increase in IPO proceeds. The APAC region has faced headwinds on account of geopolitical and economic challenges. Geopolitical tensions may compel businesses to explore alternative IPO markets and more favorable regulatory environments. Finance executives forecast divergent paths for the KSA IPO valuations in 2024–25, driven by investor sentiments, past performance, growth prospects and market conditions.
Setting expectations for an IPO
To attract investors, an IPO must offer a competitive valuation. Key factors that can impact an IPO valuation include industry outlook and stability, growth prospects, favorable market conditions, company's track record and past performance, regulatory compliance, quality and experience of the management team and corporate governance practices.
Investors scrutinize and closely examine factors such as revenue trends, profitability, market share, strategic positioning and overall growth trajectory to assess the company’s growth potential. A strong historical track record along with a robust equity story is likely to lead to a higher valuation for an IPO. Fifty-one percentage of executives believe that valuations will improve, leading to more IPOs in the KSA during 2024–25, while 34% believe that valuations will be stable and 15% think that valuations will fall.