With the market in flux, how can your IPO journey stay the course?

By George Chan

EY Global IPO Leader; EY Greater China Assurance COO

Passionate about helping clients excel in this transformative age. Keen reader. Movie fan.

4 minute read 14 Dec. 2023

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In 2023, IPO hopefuls navigate a market in flux. Pockets of resurgence are appearing, but prudent pricing remains vital.

In brief
  • In 2023, global IPO volumes fell 8%, with proceeds down by 33% compared with 2022.
  • New IPO hotspots emerged, outpacing traditional IPO powerhouses.
  • Potential interest rate cuts in 2024 are expected to attract investors back to IPOs.

The global IPO (Initial Public Offering) market landscape shifted in 2023, with improved Western market sentiment counterbalanced by China’s cool-down, as well as a contrast between hot emerging market small-cap deals and lackluster large offerings. The global IPO market ended 2023 with 1,298 IPOs raising US$123.2b. When comparing to 2022, IPO proceeds lagged last year’s tepid pace by roughly a third, although deal volumes have picked up in both the Americas and EMEIA. These and other findings are available in the EY Global IPO Trends 2023, a quarterly report analyzing global IPO data to determine market trends and outlook for the year ahead. 

  • Methodology

    EY analyzed IPO data for 2023 (up to 4 December) to determine key IPO market trends and the outlook for 2024. The analysis utilized data provided by Dealogic, Capital IQ, Wind, SPACInsider and EY. The Dealogic data in this report are under license by ION. ION retains and reserves all rights in such data. SPAC data are excluded from all data in this report, except where indicated.

Despite a strong equity market rally and low volatility, public offerings have remained muted in many developed markets, with the exception of a brief September window in the US. Extraordinarily aggressive monetary policies have become a major factor affecting IPO activity, superseding the influence of stock market performance. The US and Europe have both seen 10 or more rate hikes since 2022, sending IPO volume down in larger mature markets. As global inflation has eased substantially this year, the expectation of interest rate reductions could encourage investors by offering a more reliable return on investment in IPOs, which should boost activity.

The flurry of large listings that came to the market in September 2023 saw underwhelming after-market performance, reflecting ongoing mismatched valuation expectations between issuers and investors. This has prompted some IPO candidates to consider delaying their plans. Companies are further discouraged by uncertainty over geopolitical events. Those choosing to go public are proceeding with care, scrutinizing market signals and potentially postponing their offering.

The year has seen new IPO hotspot markets emerge, outpacing traditional IPO powerhouses. Benchmarking against 5-year average IPO activity, highlights include Indonesia, Malaysia and Turkey notching increases in deal volume and proceeds. Meanwhile India, Saudi Arabia and Thailand have recorded an increase in the number of IPOs. In contrast, Hong Kong's IPO market experienced a 20-year low in proceeds this year and the pace of IPO issuance in Mainland China slowed in the latter half of 2023. 

There is some optimism, with IPO issuers and investors more enthusiastic compared to last year, and with  issuers keen to take advantage of an anticipated market upswing. The EY CEO Outlook Pulse – October 2023 showed that 40% of private company CEOs who have transactions in sight over the next 12 months are exploring IPOs, spin-offs, and divestments, looking to make the most of the IPO window that could reopen in 2024.

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    A scatter chart showing 2023 IPO number and proceeds by country versus their 5-year average. The X-axis shows 2023 IPO numbers vs. 5-year average represented as percentage change. The Y-axis shows 2023 IPO proceeds vs. 5-year average represented as percentage change. From bottom-left to top-right the chart shows:

    United Kingdom, with a negative sixty-three percent change in IPO numbers vs. the 5-year average, a negative ninety-three percent change in IPO proceeds vs. the 5-year average and a 2023 market cap of two-trillion, six-hundred and twenty billion, eight-hundred and ninety-seven million US dollars.

    Australia, with a negative sixty-one percent change in IPO numbers vs. the 5-year average, a negative eighty-one percent change in IPO proceeds vs. the 5-year average and a 2023 market cap of one trillion, five-hundred and four, seven-hundred and thirty-eight million US dollars.

    Hong Kong, with a negative forty-three percent change in IPO numbers vs. the 5-year average, a negative eighty-two percent change in IPO proceeds vs. the 5-year average and a 2023 market cap of three trillion, nine-hundred and thirty, nine-hundred and seventy-two million US dollars.

    United States, with a negative thirty-six percent change in IPO numbers vs. the 5-year average, a negative sixty-six percent change in IPO proceeds vs. the 5-year average and a 2023 market cap of forty-two trillion, nine-hundred and four, five-hundred and sixty-one million US dollars.

    South Korea, with a positive seven percent change in IPO numbers vs. the 5-year average, a negative sixty-seven percent change in IPO proceeds vs. the 5-year average and a 2023 market cap of one trillion, six-hundred and one, two-hundred and ninety million US dollars.

    Thailand, with a positive four percent change in IPO numbers vs. the 5-year average, a negative sixty-nine percent change in IPO proceeds vs. the 5-year average and a 2023 market cap of four-hundred and eighty, five-hundred and seventy-six million US dollars.

    Mainland China, with a negative sixteen percent change in IPO numbers vs. the 5-year average, a negative twenty-three percent change in IPO proceeds vs. the 5-year average and a 2023 market cap of ten trillion, six hundred and ninety-four, three-hundred and thirty-seven million US dollars.

    Italy, with a negative six percent change in IPO numbers vs. the 5-year average, a negative eight percent change in IPO proceeds vs. the 5-year average and a 2023 market cap of seven-hundred and forty-seven, four-hundred and thirty-nine million US dollars.

    Japan, with a negative six percent change in IPO numbers vs. the 5-year average, a positive four percent change in IPO proceeds vs. the 5-year average and a 2023 market cap of five trillion, four-hundred and sixty-seven, four-hundred and four million US dollars.

    Saudi Arabia, with a positive one-hundred and one percent change in IPO numbers vs. the 5-year average, a negative sixty-four percent change in IPO proceeds vs. the 5-year average and a 2023 market cap of two trillion, nine-hundred and twenty-six, nine-hundred and nineteen million US dollars.

    India, with a positive eighty-six percent change in IPO numbers vs. the 5-year average, a negative ten percent change in IPO proceeds vs. the 5-year average and a 2023 market cap of three trillion, seven-hundred and eight, five-hundred and eighty-four million US dollars.

    Malaysia, with a positive twenty-one percent change in IPO numbers vs. the 5-year average, a positive twenty-five percent change in IPO proceeds vs. the 5-year average and a 2023 market cap of three-hundred and fifty-seven, two-hundred and sixty-one million US dollars.

    Indonesia, with a positive thirty-three percent change in IPO numbers vs. the 5-year average, a positive forty-nine percent change in IPO proceeds vs. the 5-year average and a 2023 market cap of six-hundred and sixty-two, and eighty-three million US dollars.

    Turkey, with a positive one-hundred and twenty percent change in IPO numbers vs. the 5-year average, a positive one-hundred and sixty-three percent change in IPO proceeds vs. the 5-year average and a 2023 market cap of three-hundred and seventy-one, three-hundred and fifty-one million US dollars.

Despite eye-catching technology listings such as ARM Holdings, Instacart, and Klaviyo, and significant venture capital investments in generative AI (GenAI) startups, the technology sector continued to experience decline in IPO numbers, valuations and after-market performance. An expansion of IPOs from the consumer and industrials sectors has been driven by buoyant economic growth and global trading. Sector IPO trends reflect shifting global economic and supply chain dynamics, which bring new winners and losers across sectors – but strong fundamentals still win out overall. 

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Overall regional performance: 2023 wasn’t the year the regions thought it would be

While the number of Americas IPOs in 2023 was up 15% compared with 2022’s muted level, proceeds were up by nearly three times due to several high-profile deals. In total, 153 deals raised US$22.7b, with 132 of them on US exchanges. The region had seven deals that raised over US$500m in 2023 versus just four in 2022, but smaller-sized IPOs continued to dominate IPO activity on US exchanges. Overall, the increase in IPO volumes compared to last year sparked optimism in the market in 2023 for a broader IPO market recovery. Despite an optimistic environment, investors remain selective, calling for strong fundamentals and preparedness.

This year, 732 companies went public in Asia-Pacific raising US$69.4b, a YOY fall of 18% and 44% respectively. Facing economic and geopolitical headwinds, 2023 was challenging for Asia-Pacific’s IPO markets, with the two powerhouses of Mainland China and Hong Kong continuing to decline in volume and value. However, Mainland China remained a vital source of IPO funding, contributing over 40% of global proceeds in 2023. In the Asia-Pacific IPO market, well-capitalized companies backed by private equity and venture capital in the environmental, social and governance (ESG) and technology space can wait until valuations improve. Realistic pricing and post-IPO performance may encourage some of these companies that are prepared for IPO with strong governance and a good equity story to list in 2024.

The EMEIA IPO market is on its path to recovery, with a 7% rise in volume, even with a 39% decrease in proceeds. This is on the back of large deals from MENA, heightened activity in India and CESA as well as a few high-profile cross-border IPOs to the US. This region finished the year with 413 deals, raising US$31.1b. And, even though five of the world’s largest 10 deals were from EMEIA, the region had a greater number of smaller IPOs than large ones compared with 2022, hence the fall in total proceeds. MENA continued to dominate the top 10 EMEIA IPOs in 2023, with half of the IPOs from this geography. Overall, in EMEIA, the outlook for 2024 is optimistic but cautious, given an unpredictable market environment. In various countries, governments and regulators are taking steps to stimulate capital markets to boost investment in disruptive innovation.

  • Open image description#Close image description

    Column chart showing IPO activity by geography in 2023, in terms of percentage change versus 2022. The complete data per regions showing is as follows: Globally, the number of IPOs is down eight percent, with total IPO proceeds down thirty-three percent. For the Americas, the number of IPOs is up fifteen percent, with IPO proceeds up one-hundred and fifty-five percent. For Asia-Pacific, the number of IPOs is down eighteen percent, with IPO proceeds down forty-four percent. For EMEIA, the total number of IPOs is up seven percent, with total IPO proceeds down thirty-nine percent.

2024 outlook: candidates must be prepared  

Enthusiasm for IPOs is high, and smaller deals are emerging with improved after-market performance. While many governments are taking measures to boost IPOs, activity is particularly strong in high-growth economies. Before monetary policy eases and geopolitical climate stabilizes, IPO candidates should keep their eyes on building fundamentals and managing price expectations to capitalize on the fleeting windows as 2024 progresses.

Globally, moderating inflation and potential 2024 interest rate cuts could attract investors back to IPOs, by improving liquidity and return outlooks. However, sustained geopolitical instability may undermine confidence. Broadly, the year ahead hinges on an improving macroeconomic backdrop for IPO revival, as companies eagerly await more favorable market conditions to widen IPO windows.

IPO candidates looking to go public in 2024 will need to be well-prepared. Key factors to consider are: inflation and interest rates, government policies and regulations, recovery of economic activities, geopolitical tensions and conflicts, ESG agenda, and global supply chain. All options should also be considered, from alternative IPO processes (direct listing or dual and secondary listings) to other financing methods (private capital, debt or trade sale).

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  • Methodology

    EY analyzed IPO data for 2023 (up to 4 December) to determine key IPO market trends and the outlook for 2024. The analysis utilized data provided by Dealogic, Capital IQ, Wind, SPACInsider and EY. The Dealogic data in this report are under license by ION. ION retains and reserves all rights in such data. SPAC data are excluded from all data in this report, except where indicated.

  • Data definitions for all charts

    The data presented on this webpage and in the EY Global IPO Trends 2024 press release is sourced from Dealogic, Capital IQ, Wind, SPACInsider and EY analysis unless otherwise noted. The Dealogic data are under license by ION. ION retains and reserves all rights in such data. SPAC data are excluded from all data in this report, except where indicated.  

    Q4 2023 refers to the fourth quarter of 2023 and covers completed IPOs from 1 October to 4 December 2023, plus expected IPOs by 31 December 2023 (forecasted as of 4 December 2023). Q4 2022 refers to the fourth quarter of 2022 and covers completed IPOs from 1 October to 31 December 2022.  Full-year 2023 refers to the calendar year 2023 and covers completed IPOs from 1 January 2023 to 4 December 2023, plus expected IPOs by 31 December 2023 (forecasted as of 4 December 2023). Fully-year 2022 refers to the calendar year 2022 and covers completed IPOs from 1 January 2022 to 31 December 2022.  Sources: EY analysis, Dealogic.

    • In compiling the IPO statistics included in these reports and press releases, we focus only on IPOs of operating companies and define an IPO as a "company's offering of equity to the public on a new stock exchange".
    • This report includes only those IPOs for which Dealogic and EY teams offer data regarding the first trade date (the first day on which the security start trading on a stock exchange), and proceeds (funds raised, including any over-allotment sold).
    • The first trade date determines which quarter a deal is attributed to. Postponed IPOs, or those that have not yet been priced, are therefore excluded. Over-the-counter (OTC) listings are also excluded.
    • In an attempt to exclude non-operating company IPOs such as trusts, funds and special purpose acquisition companies (SPACs), companies with the following Standard Industrial Classification (SIC) codes are excluded:
      • 6091: Financial companies that conduct trust, fiduciary and custody activities.
      • 6371: Asset management companies such as health and welfare funds, pension funds and their third-party administration as well as other financial vehicles.
      • 6722: Companies that are open-end investment funds.
      • 6726: Companies that are other financial vehicles.
      • 6732: Companies that are grant-making foundations.
      • 6733: Asset management companies that deal with trusts, estates and agency accounts.
      • 6799: Special purpose acquisition companies (SPACs).
  • Definitions for IPO performance by geography

    • Africa includes Algeria, Botswana, Egypt, Ghana, Kenya, Madagascar, Malawi, Morocco, Namibia, Rwanda, South Africa, Tanzania, Tunisia, Uganda, Zambia and Zimbabwe.
    • Americas includes Argentina, Bermuda, Brazil, Canada, Chile, Colombia, Ecuador, Jamaica, Mexico, Peru, Puerto Rico and the United States.
    • ASEAN includes Brunei, Cambodia, Guam, Indonesia, Laos, Malaysia, Maldives, Myanmar, North Mariana Islands, Philippines, Singapore, Sri Lanka, Thailand and Vietnam.
    • Asia-Pacific includes ASEAN (listed above), Greater China (as stated below), Japan, South Korea, Australia, New Zealand, Fiji and Papua New Guinea.
    • EMEIA includes Armenia, Austria, Bangladesh, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Kazakhstan, Luxembourg, Lithuania, Netherlands, Norway, Pakistan, Poland, Portugal, Russian Federation, Spain, Sweden, Switzerland, Turkey, Ukraine and United Kingdom plus the Middle East countries (listed below) and Africa countries (listed above).
    • Greater China includes Mainland China, Hong Kong, Macau and Taiwan.
    • India region includes IPO activity in Indian and Bangladesh stock exchanges.
    • Middle East includes Bahrain, Iran, Israel, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates and Yemen.
  • Definitions for IPO deals by sector and IPO proceeds by sector

    Sectors are classified according to Thomson general industries using a company’s Sector Industry Classification (SIC) code. There are 11 sectors, which are defined below with their specific industries. The 11 sectors are shown on the horizontal axis.

    • Consumer includes the combination of “Consumer staples” and “Consumer products and services” sectors. Its specific industries include: agriculture and livestock, food and beverage, household and personal products, textiles and apparel, tobacco, educational services, employment services, home furnishings, legal services, other consumer products, professional services, as well as travel services. 
    • Energy industries include alternative energy sources, oil and gas, other energy and power, petrochemicals, pipelines, power, as well as water and waste management.
    • Financials industries include asset management, banks, brokerage, credit institutions, diversified financials, government sponsored enterprises, insurance, as well as other financials.
    • Health and life sciences industries include biotechnology, health care equipment and supplies, health care providers and services (HMOs), hospitals, as well as pharmaceuticals.
    • Industrials industries include aerospace and defense, automobiles and components, building/construction and engineering, machinery, other industrials, transportation, as well as infrastructure.
    • Materials industries include chemicals, construction materials, containers and packaging, metals and mining, other materials, as well as paper and forest products.
    • Media and entertainment industries include advertising and marketing, broadcasting, cable, casino and gaming, hotels and lodging, motion pictures or audio visual, other media and entertainment, publishing, as well as recreation and leisure.
    • Real estate industries include non-residential, other real estate, real estate management and development, as well as residential.
    • Retail industries include apparel retailing, automotive retailing, computers and electronics retailing, discount and department store retailing, food and beverage retailing, home improvement retailing, internet and catalogue retailing, as well as other retailing.
    • Technology industries include computers and peripherals, electronics, internet software and services, IT consulting and services, other high technology, semiconductors, as well as software.
    • Telecommunications industries include other telecom, space and satellites, telecommunications equipment, telecommunications services, as well as wireless.

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Summary

The 2023 global IPO market saw continued shifting dynamics, with improved sentiment in Western markets balanced by a challenging market in Asia-Pacific. Globally, proceeds fell by a third compared to 2022, though deal volumes increased in the Americas and EMEIA.

Companies considering an IPO in 2024 need to focus on thorough preparation, considering factors like inflation, interest rates, government regulations, economic recovery, geopolitical tensions, the ESG agenda, and global supply chains. They also need to show resilience, demonstrate strong fundamentals and manage price expectations to prepare for fleeting IPO windows in 2024.

About this article

By George Chan

EY Global IPO Leader; EY Greater China Assurance COO

Passionate about helping clients excel in this transformative age. Keen reader. Movie fan.