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Turning the tide: Global IPOs look for a rebound in 2024

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The outlook for global IPO activity in 2024 is improving as interest rates stabilize and stock market valuations rally after a challenging 2023

Focusing on signs of recovery

Global IPO markets endured a difficult 2023 in the face of rising interest rates and geopolitical uncertainty. But after a challenging 12 months, the outlook for IPO activity in 2024 is brightening

This past year has been one of the most challenging years for the global IPO markets since the 2008 global financial crisis.

Rising interest rates constrained liquidity, investors were cautious and choppy stock market valuations caused potential IPO candidates to put their listing ambitions on hold, hoping that market conditions would improve.

Regulatory changes are also a concern. For example, the US Securities and Exchange Commission has recently adopted new climate-related disclosure rules for listed companies. While these rules have been stayed pending judicial review, issuers worry that this type of rulemaking will increase compliance costs and discourage some companies from pursuing IPOs.

However, there have been some bright spots. India took center stage as one of the world's most active stock markets for new listings due to its thriving domestic economy. In the second half of 2023, the US stock exchanges showed renewed promise with a limited number of high-profile, cross-border listings. Moreover, London and Hong Kong forged ahead with changes to listings frameworks that will open up new opportunities when markets rebound.

There are signs that a rebound in IPO volume is in the cards for this year, with interest rates peaking and stock markets around the world rallying during the early months of 2024. There have already been 290 IPOs globally in Q1 2024, with a combined deal value of US$23.02 billion.

Although interest rates remain elevated and geopolitical risk continues to loom large, there is a building sense of confidence among investors, advisers and companies that after a challenging year, better days lie ahead for IPOs in 2024 and beyond.

Market overview: The global IPO landscape

Rising interest rates and geopolitical uncertainty put the brakes on new IPO activity across global markets in 2023. However, after a challenging period, the outlook for IPO activity in 2024 is improving

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Ready to launch: US stock markets are poised for a strong 2024

US IPO markets have been lackluster during the past 24 months, but, as interest rates stabilize and stock valuations recover, the backdrop for US IPOs in 2024 is improving

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Changes ahead: London market is ready for reform

Stakeholders across London's capital markets are ready to seize the opportunity to reform and reenergize IPO activity in one of the world's most important financial centers

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Coming of age: A strong year for India’s capital markets

India's stock exchanges saw more IPOs than any other jurisdiction, as its strong domestic economy buoyed markets

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Resilience and reform: Hong Kong adapts to change

Hong Kong is adapting to changes amid challenging times

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Building a pipeline: Will Brazil emerge from its dry season?

After a dry spell, the pipeline of Brazilian IPO candidates is showing signs of filling up again

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Bright spots: Sweden and CIS present opportunities after a challenging 2023

After a slow 12 months, issuers and investors in Sweden and the CIS are hopeful that their IPO markets can punch above their weight in the year ahead

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Challenges remain but IPO outlook brightens

Global IPO markets have had a comparatively positive start to 2024 after a challenging year. Investors and IPO candidates hope that stable interest rates and pent-up demand will support an increasing flow of IPO activity in the months ahead

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indian rupees

Coming of age: A strong year for India’s capital markets

India's stock exchanges saw more IPOs than any other jurisdiction, as its strong domestic economy buoyed markets

3 min read

India stood out as one of the few bright spots for global IPO activity in 2023. A strong domestic economy and rising corporate earnings enabled India to deliver more IPOs than any other jurisdiction.

In 2023, India IPO proceeds totaled US$7.89 billion, which is in line with the US$7.99 billion recorded in 2022. The growth in the number of IPOs, however, is what has encouraged investors, with the IPO count for 2023 coming in at 234, the highest annual total since 2017 and an increase of 56 percent on the 150 listings recorded in 2022.

Activity was particularly buoyant in the second half of last year, accounting for US$5.81 billion of the annual issuance and 159 IPOs. The high volume of new IPOs coupled with the gains across the wider stock market helped to push the total market capitalization of listed companies in India to approximately US$4 trillion, overtaking Hong Kong as the world’s seventh-largest market, according to the Financial Times.

A strong start to 2024

Momentum from H2 2023 has carried into 2024. By the end of January 2024, India had already delivered 21 IPOs, raising US$678 million—a huge jump on the US$17 million recorded in January 2023.

More IPOs are anticipated from a range of sectors and sources, with at least 66 companies filing listing documents with India's securities regulator, according to the Financial Times, citing brokerage firm IIFL.

For example, the Indian subsidiaries of multinational corporations have performed so well that several IPOs of these entities are now in the cards. According to multiple publications, large IPOs for marquee global companies with Indian subsidiaries are looking to tap into the Indian capital markets to unlock value from their Indian operations and to increase their connections with India.

Domestic businesses are also positioning themselves to take advantage of favorable market conditions, with Aadhar Housing Finance, a Blackstone-sponsored housing finance company, among the candidates for a potential IPO.

Encouraging fundamentals

The positive outlook for IPO activity in India is underpinned by a combination of favorable fundamentals.

Investment in infrastructure, growth in manufacturing and steady consumer spending have made India the fastest-growing economy in the G-20, and ratings agency Moody’s has forecasted a GDP growth of just under 7 percent for 2024.

India has also enjoyed increasing inflows of foreign capital, as investors have moved to diversify their Asia-Pacific portfolios in response to the cooling growth in China. Capital inflows into India from overseas investors reached record levels during the past year.

Meanwhile, rapid growth in digital infrastructure has helped to boost retail investment in Indian equities, with the number of share trading accounts in the country totaling a record high of nearly 140 million. As a result, India's mutual funds industry is booming, with mutual fund assets under management increasing by almost 20 percent in 2023, according to Morningstar, boosting a growing middle class that is investing their savings in equity markets.

Outward looking

As India's economy, investor base and stock markets grow, Indian businesses and regulators are starting to look beyond the domestic market to international opportunities.

The Indian rupee is still subject to government foreign exchange controls and, thus, for many years, local businesses have not been able to pursue listings overseas. However, the government has now set up an international finance center in Gujarat (also known as GIFT City) where Indian issuers will be able to raise capital in foreign currency from international investors.

Previously, Indian companies could only secure capital from overseas exchanges through the American or Global Depositary Receipts. But it is hoped that the option to list in GIFT City will help domestic companies access larger pools of global capital and secure better valuations.

As India consolidates its position as a leading global economy, the country's businesses and policymakers are increasingly looking to leverage domestic success on an international stage.

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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.

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