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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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modern architecture

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

4 min read

Where we've been

Global IPO deal value and deal count fell to six-year lows in 2023, reflecting a challenging year for the broader capital markets.

Proceeds from IPOs globally fell 30 percent year-on-year to US$120.05 billion in 2023, while the number of IPOs globally dropped 16 percent to 1,344 IPOs, as inflation and interest rate hikes in key markets weighed heavily on offering activity. Stock markets across all jurisdictions felt the macroeconomic headwinds as central bankers in the US, UK and Europe increased interest rates multiple times during the past two years as part of a prolonged attempt to combat rising inflation.

Inflationary and interest rate pressures also weighed on Latin American markets, with no IPOs recorded in Brazil, the region's largest economy, for two years. Moreover, in Asia-Pacific, disruption in China's real estate sector had an adverse effect on the broader economy and negatively impacted IPO activity.

IPO sentiment across all regions was also adversely affected by rising geopolitical tensions and the conflicts in Ukraine and the Middle East. Furthermore, upcoming elections in the US, Mexico, UK and India have added layers of uncertainty for investors to navigate.

Where we're going

Notwithstanding the diverse obstacles that hindered IPO activity in 2023, there is reason for cautious optimism for deal activity in 2024, as interest rates stabilize and stock markets rally.

Encouragingly, global stock market valuations have rebounded in recent months, with the MSCI All Countries World Index showing gains of more than 7 percent during the first quarter of 2024, and more than 20 percent during the past 12 months. These higher valuations will make IPOs more attractive to issuers and selling shareholders, especially those who may have put IPO plans on hold in 2022 and 2023 when valuations and outlooks dropped.

In particular, new IPO issuance will be driven by the growing pressure on private equity managers to realize exits and make distributions to investors after a slow year in 2023. According to Mergermarket, global private equity exit value slid 45 percent year-on-year to US$337.34 billion in 2023, the lowest level observed in a decade.

This has led to a backlog of unsold portfolio companies. According to Bain & Co., buyout funds have US$2.8 trillion worth of unsold companies on their books—more than four times the levels observed during the 2008 financial crisis. Private equity managers will only be able to sit out for so long, and, as the demand to exit intensifies, IPOs will return as a key solution for selling portfolio companies.

US to lead recovery

The US—home to the New York Stock Exchange and Nasdaq (the world's two largest stock exchanges)—is well positioned to lead a global IPO rebound.

Notwithstanding inflationary and interest rate factors, the US economy has proven resilient throughout the downcycle, growing by 2.5 percent year-on-year in 2023. This helped to support a marginal year-on-year increase in US IPO proceeds to US$23.9 billion in 2023, although the past two years of IPO issuance have come in materially below the US$316.63 billion of IPO issuance secured in the US at the peak of the market in 2021.

Nobody is anticipating a return to the heights of 2021. However, US IPO activity is already improving in 2024, with the number of US IPOs during the first two months of 2024 up 24 percent compared to the same period last year, as well as the landmark IPO of social media company Reddit on the New York Stock Exchange in March, pricing at the top end of its range and showing strong initial trading.

Further, more visibility on inflation and interest rates will also help increase IPO activity in Europe, and the strong post-IPO performance of German defense contractor Renk and Greece's Athens International Airport following their market debuts in early 2024 have set the tone for a potentially more active European IPO market for the rest of the year. Swedish IPO markets are expected to be among the climbers in Europe, as more private equity firms (a particularly key source of IPO candidates in Sweden) line up assets for exit, while the London Stock Exchange should benefit from reforms set to make the UK listings regime more competitive.

In Asia-Pacific, the Hong Kong Stock Exchange is also set to have a better year, benefiting from the introduction of a series of strategic listings reforms and growing interest from issuers in the Middle East.

After performing well in 2023, India's market is expected to have another good year in 2024. India was one of the few jurisdictions where the number of IPOs (234) bucked the global downward trend, as robust domestic economic growth saw India deliver the highest number of IPOs in the world in 2023.

In Latin America, optimism is also growing, with all eyes on the region's largest economy, Brazil. After a two-year hiatus, Brazil's IPO markets are preparing to spring back to life, as a number of businesses in the financial services, utilities and mining sectors prepare for listings. Investors are also closely watching the developments in Argentina, where the election of President Javier Milei, who ran on a platform of pro-market economic reform, has seen Argentine stock markets climb by more than 350 percent over the past 12 months to the end of Q1 2024. Mexico will be another Latin American jurisdiction to watch, with the IPO of discount retailer BBB Foods (which operates the Tiendas 3B store network) early in 2024 opening the way for other IPO candidates.

Overall, after a choppy 2023 for almost all jurisdictions, global IPO markets appear to be moving in the right direction.

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