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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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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

4 min read

The past 12 months have not been the best for European IPO activity, with EMEA IPO proceeds (including SPACs) falling 24 percent year-on-year to US$22.19 billion.

After a challenging year when IPO appetite was impacted by rising interest rates and high inflation, it is hoped that European IPO activity will rally. Issuers and businesses in Sweden and the Commonwealth of Independent States (CIS) region are hoping to be at the forefront of the rebound.

Clearing a backlog

IPO deal flow was restricted in 2023 in both jurisdictions. The CIS has always been a small market, delivering only two IPOs in 2023 with less than US$30 million in proceeds for the year.

However, in Sweden, the downswing has been pronounced. There was only one IPO on the Nasdaq Stockholm last year, with proceeds coming in at US$210 million—well below the US$358 million in proceeds raised in 2022 and a far cry from the exceptional performance of the Swedish IPO market in 2021, when 24 IPOs on the Nasdaq Stockholm raised proceeds of US$9.53 billion.

Sweden has been directly impacted by slowing private equity exit activity. Over the past ten years, the Swedish IPO market has seen more private equity players enter the market, and with private equity managers extending the hold periods of portfolio companies through rising interest rate cycles, the pipeline of IPO deals has run dry. There were only 20 private equity exits in Sweden in 2023—the lowest number since 2016, according to Mergermarket.

Unexited private equity backlog should spur an uptick

However, private equity firms will only be able to delay exits for so long, and with Bain & Co. reporting that the value of unexited private equity portfolio companies is more than four times the levels seen during the 2008 global banking crisis, private equity firms will have to start exploring IPO options for exiting soon.

Pent-up investor demand after 12 months of limited opportunity will also have to be released. Sweden has an established retail and family office investor base that has always had a strong appetite for backing new IPO opportunities. IPOs also receive consistent institutional support from the country’s large AMF and AP pension funds. After a dearth of activity in 2022 and 2023, these investors will be eager to start deploying capital in IPOs that come to the market in 2024.

At the end of last year, there were some signs that the IPO window was reopening and providing investors with more opportunities to invest. The IPO of discount retailer Rusta received strong support and, looking ahead to the rest of 2024 and the beginning of 2025, the pipeline for potential IPOs is looking much more promising than a year ago.

For example, real estate group SBB is considering listing its subsidiary Public Property Invest, Swedish industrial group Novedo may pursue an IPO in 2024 after exploring its options to list last year and battery maker Northvolt may proceed with its listing on the Stockholm exchange; if successful, the business could be worth as much as US$20 billion, according to the Financial Times.

Investors are also monitoring Sweden as a hub for potential cross-border listings, with buy-now-pay-later fintech group Klarna among the Swedish companies exploring IPO opportunities in the US, according to Finance Magnates.

International investors lean into CIS

For CIS IPO candidates, cross-border listings are also expected to be a driver of activity.

The conflict in Ukraine and sanctions regimes targeting Russia have prevented Russian-based companies from listing abroad, prompting global investors to pay closer attention to opportunities emerging from neighboring CIS regions. International investors have also kept a close eye on ongoing privatization programs in CIS countries as a potential source of IPOs from the region.

Cross-border IPOs that have already emerged from the CIS region this year include the Nasdaq debut of Kaspi.kz in January. For its US listing, the Kazakhstan-based fintech company raised US$1 billion in a deal valuing the company at more than US$17.51 billion.

A month later, Kazakhstan airline Air Astana successfully landed an IPO in London, valuing the carrier at around US$847 million.

In the coming years, Uzbekistan also aims to be a leading CIS country in terms of attracting investor interest.

The recent privatization program extends the government of Uzbekistan's privatization plans for future years, with the firm intention to allow certain large state-owned companies to go public, including by way of IPO. Earlier this year, Shavkat Mirziyoyev, the president of Uzbekistan, also publicly discussed plans of obtaining an international credit rating for the national airline, Uzbekistan Airways, and plans for its potential IPO.

As global investors look for alternatives to the Russian market, a window has opened for other CIS companies to also go global.

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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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