3 minute read 31 Mar 2022
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How do you know when a change of direction is necessary?

By Paul Go

EY Global IPO Leader

Leads Chinese and multinational companies in client servicing domain. Heads Hong Kong real estate, hospitality and construction sector audit group.

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Partner, Financial Accounting Advisory Services Leader and Head Transaction Accounting & IPO | EY Switzerland

Tobias Meyer is responsible at EY Switzerland for Transaction Accounting and IPOs.

3 minute read 31 Mar 2022

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Global IPOs remain resilient amid elevated uncertainty and market volatility.

In brief
  • Cross-border listing momentum has been heightened as US market soars and reforms attract global companies.
  • A gradual broadening of IPO sectors opens doors to more diverse investor opportunities.
  • IPO pipelines signal sustained AI enthusiasm.

Amid a global economic slowdown, market volatility, geopolitical shifts and monetary easing, the global IPO market in Q3 2024 has shown signs of cautious optimism. Despite a dip in year-over-year volumes by 14% to 310 IPOs and proceeds by 35% to US$24.9b, Q3 modestly outpaced the first two quarters of 2024 in IPO launches.

  • Methodology

    The EY organization analyzed IPO data for Q3 2024 (as of 16 September plus expected deals by 30 September 2024) to identify key IPO market trends and the outlook for the remainder of the year. The analysis utilized data provided by Dealogic, S&P Capital IQ, Mergermarket, PitchBook, Oxford Economics, Refinitiv and EY research. Special purpose acquisition company (SPAC) data is excluded from all data in this report, except where indicated.

  • Open image description#Close image description

    The bar chart illustrates global IPO activity from Q1 2022 to Q3 2024, showing the number of IPOs per quarter alongside the total proceeds in billions of US dollars (US$b). The x-axis represents the quarters from Q1 2022 to Q3 2024, while the y-axis displays the number of IPOs, ranging from 0 to 400. Each bar indicates the number of IPOs for each quarter, with Q1 2022 having 326 IPOs, Q2 2022 showing 321 IPOs, Q3 2022 reaching 371 IPOs, and Q4 2022 peaking at 397 IPOs. In 2023, the number of IPOs decreased, with Q1 at 307, Q2 at 317, Q3 at 359, and Q4 at 368. For 2024, Q1 recorded 281 IPOs, Q2 saw 279 IPOs, and Q3 increased slightly to 310 IPOs.

    A line graph runs above the bars to indicate the total proceeds for each quarter. The proceeds were highest in Q1 2022 at $54.6 billion, followed by Q2 2022 at $40.9 billion and Q3 2022 at $52.3 billion. Q4 2022 had proceeds of $36.5 billion. In 2023, the trend shows a decline, with Q1 at $22.1 billion, Q2 at $40.4 billion, Q3 at $38.3 billion, and Q4 at $25.3 billion. In 2024, proceeds were $24.5 billion in Q1, $28.2 billion in Q2, and $24.9 billion in Q3. Overall, the chart indicates a notable peak in IPO activity in Q4 2022, along with a general downward trend in both proceeds and IPOs throughout 2023, followed by a slight recovery in Q3 2024.

Navigating through a complex economic and geopolitical landscape, marked by the start of a global interest rate easing cycle, IPO activity in Q3 has contended with heightened market volatility. Despite these challenges, the Americas and EMEIA demonstrated resilience in the first three quarters of 2024, with EMEIA's IPO proceeds up by 45% compared to the same period last year, helping to mitigate the global market's overall downturn. These findings are detailed in the EY Global IPO Trends Q3 2024, a quarterly report analyzing global IPO data to determine market trends, key insights to support business planning and market outlook.

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Dynamics shift as the influence of interest rates recedes and new factors emerge

Elevated interest rates have significantly influenced IPO activity during the recent phase of high inflation and monetary tightening. As inflationary pressures diminish and the need to bolster economic growth becomes a priority, a global interest rate easing cycle has commenced, with advanced economies at the forefront. Lower interest rates and the easing of inflationary pressures could offer some relief to companies looking to go public by reducing the cost of capital and encouraging investment in new ventures. With increased clarity around interest rate policies, their direct influence on the IPO market trajectory may start to fade, allowing other factors to play more pivotal roles in shaping the IPO landscape. Economic headwinds and geopolitical risks might temper enthusiasm for public offerings in certain sectors and across continents, while policies from the election super cycle could add layers of complexity to the IPO decision-making process. 

In August 2024, the Cboe Volatility Index (VIX), commonly known as the “fear index,” surged to its highest level in more than four years. This spike was driven by a confluence of market forces, including weakening job reports and economic indicators, escalating geopolitical tensions, volatility in technology stocks, and an increasingly contentious US presidential race. Additionally, the interest rate hike by the Bank of Japan disrupted the yen carry trade, amplifying volatility and further unsettling global markets. 

  • Open image description#Close image description

    This is a carousel showing two different bar charts. The first bar chart displays actual and forecasted interest rates for various regions from 2022 to 2025. The x-axis shows the regions and years (2022, 2023, 2024 Forecast, 2025 Forecast), while the y-axis represents interest rates in percentage terms. In the United States, the interest rate rose from 1.7% in 2022 to 5.1% in 2023, with forecasts of 5.3% in 2024 and a decrease to 4.5% in 2025. The Eurozone saw an increase from 0.6% in 2022 to 3.8% in 2023, projected to reach 4.2% in 2024 and drop to 2.5% in 2025. The United Kingdom's rate rose from 1.5% in 2022 to 4.7% in 2023, expected to be 5.1% in 2024 and decrease to 4.2% in 2025. Japan maintained a low rate of 0.0% in 2022 and 2023, forecasted to rise to 0.2% in 2024 and 0.7% in 2025. Mainland China’s rate fell from 2.8% in 2022 to 2.6% in 2023, with further declines projected. India’s rate increased from 4.9% in 2022 to 6.5% in 2023 and 2024, expected to drop slightly to 6.2% in 2025. 

    The second bar chart displays actual and forecasted inflation/CPI rates from 2022 to 2025 for six regions: United States, Eurozone, United Kingdom, Japan, Mainland China, and India. In the United States, inflation starts at 8.0% in 2022, drops to 4.1% in 2023, and is forecasted to further decline to 2.9% in 2024 and 2.5% in 2025. The Eurozone follows a similar trend, starting at 8.4% in 2022, decreasing to 5.5% in 2023, and is expected to fall to 2.3% in 2024 and 1.4% in 2025. In the United Kingdom, inflation is the highest in 2022 at 9.0%, decreasing to 7.4% in 2023, with forecasts of 2.6% in 2024 and 2.5% in 2025. Japan, which starts with relatively low inflation at 2.5% in 2022, rises slightly to 3.3% in 2023, then is forecasted to drop to 2.4% in 2024 and 1.4% in 2025. Mainland China shows very low inflation starting at 2.0% in 2022, dropping sharply to 0.2% in 2023, with forecasts of 0.4% in 2024 and 1.2% in 2025. Lastly, India starts at 6.7% inflation in 2022, decreases to 5.7% in 2023, and is forecasted to be 4.7% in 2024 and 4.5% in 2025.

US-China market value gap reaches record high 

A pivot in monetary policy has investors diverting capital from cash and low-yield bonds to more appealing asset classes, such as equities. Geographically, investors have been shifting capital from slowing economies, such as China, or geopolitically unstable countries to more promising markets, including the US and India.

Despite looming recession concerns, the US market remains the more stable and attractive option for global investors. In year-to-date (YTD) 2024, the market capitalization disparity between the US and China has reached an unprecedented high. The US market continues to outperform global peers, even with strong growth in countries like India and Japan in recent years. Elevated liquidity and valuation multiples, particularly in recent quarters, have strengthened investor confidence in high-profile transactions, including mega IPOs.

  • Open image description#Close image description

    This line chart depicts the market capitalization of major IPO markets between June 2015 and July 2024. The Eurozone’s market cap increased from 7.4 US$t in June 2015 to 11.6 US$t in June 2024, peaking at 12.7 US$t in 2021. Hong Kong’s market cap grew slightly from 3.8 US$t in June 2015 to 4.1 US$t in June 2024, with a peak of 5.4 US$t at the end of 2021. India’s market cap rose significantly from 1.8 US$t in June 2015 to 5.2 US$t in June 2024, showing strong growth. Japan saw a market cap increase from 4.5 US$t in June 2015 to 6.2 US$t in June 2024, with mild fluctuations. Mainland China’s market cap grew rapidly to a peak of 14.4 US$t in December 2021, but fell to 10.1 US$t in June 2024. The United States market cap more than doubled, increasing from 26.5 US$t in June 2015 to 55.2 US$t in June 2024.

So far this year, mega IPOs showed a clear trend toward recovery compared to the previous year, along with a consistent resurgence of PE-backed exits via IPOs. Americas led in the listings of mega deals, driven by substantial foreign listings and significant domestic offerings, including the standout IPO (US$5.1b) from Lineage, Inc. This could reflect more willingness by large businesses to enter the market while investors continue to focus on high-quality deals. 

The number of unicorn IPOs decreased from 13 in the first three quarters of 2023 to eight in the same period of 2024, with tighter liquidity and higher capital costs playing a key role in the decline. Ahead of the US Federal Reserve's rate cut in late September, its first major cut in more than four years, investors remained cautious, favoring companies with strong fundamentals. Investors have also grown more prudent in the wake of underwhelming post-IPO returns from several high-profile unicorn debuts in 2023. This has led some unicorns to pause before going public until market conditions improve. Interestingly, the one area of acceleration is venture capital (VC)-backed exits through unicorn IPOs, with five unicorns raising a total of US$3.7b, compared with just two in the same period last year, which raised US$1.3b.

Cross-border listing momentum heightened

The floodgates for cross-border listings have swung open. In the first three quarters of this year, 77 companies chose to list overseas—which included cross-border deals within the Americas, Asia-Pacific, and EMEIA regions—an increase from 64 during the same period last year. This represented a 20% YOY increase and accounted for 9% of global IPOs this year. Since 2023, approximately 52% of IPOs on US exchanges have been from foreign-domiciled issuers, hitting a 20-year high. While this percentage is partially caused by the generally low volume of IPOs in the last two years, it highlights a growing trend of international companies choosing US markets for their listings. In 2024, the robust US market attracted more listings from Mainland China, Hong Kong, Singapore and Australia compared with last year, though deal sizes were smaller. As US-China audit agreements eased delisting fears, Chinese firms have stopped pursuing Swiss listings, preferring the US for its liquidity and more advantageous valuations. Large cross-border deals, however, were dominated by Europe, with two mega transactions listed in the US and one in the Netherlands. 

While cross-border listings have continued to gain momentum, stock exchanges are tailoring their listing regimes with varying degrees of changes to accommodate the evolving business landscape, where traditional financial metrics may not fully capture a company's value or potential.

In 2024, the UK introduced its most significant listing reforms in decades, aiming to make London more competitive with markets such as New York. Effective from September 2024, the Hong Kong Exchange (HKEX) also eased listing requirements to encourage IPOs of specialist technology firms and de-SPAC transactions. 

Valuation metrics like price-earnings (P/E) ratios play a critical role when companies choose their listing destination. A higher P/E ratio signals stronger investor interest and can indicate a market’s optimism about future growth. This can make certain exchanges more attractive depending on the industry and prevailing market conditions. P/E ratios are relatively high in the US, India and the Middle East, making them favored destinations for IPO candidates and investors. 

  • Open image description#Close image description

    This chart shows the outbound and inbound cross-border listings in the Americas, EMEIA and Asia-Pacific as well as the price-earnings ratio for select stock exchanges in those areas. In the Americas, in Q1-Q3 2023, there were 3 outbound listings and 48 inbound listings. In Q1-Q3 2024 there were 4 outbound listings and 62 inbound listings. The price-earnings ratio was 26.8x on the S&P 500 and 19.2x on the NASDAQ Composite Index.

    In EMEIA, in Q1-Q3 2023, there were 10 outbound listings and 9 inbound listings. In Q1-Q3 2024 there were 8 outbound listings and 3 inbound listings. The price-earnings ratio was 15x on the UK FTSE 100, 15.3x on the Germany DAX, 15.6x on the France CAC 40, 22.9x on the Saudi Tadawul All Share and 24.1x on the India BSE Sensex Index.  

    In Asia-Pacific, in Q1-Q3 2023, there were 45 outbound listings and 1 inbound listing. In Q1-Q3 2024 there were 54 outbound listings and 1 inbound listing. The price-earnings ratio was 12x on the China SSE Composite, 9.7x on the Hong Kong Hang Seng, and 20.4x on the Japan Nikkei 225. 

Broadening of IPO sectors opens doors to more diverse investor opportunities

Monetary policy shifts have significantly influenced IPO activity across various sectors since the COVID-19-induced expansion of the money supply in 2020. During the period of monetary tightening from early 2022 to the first half of this year, marked by higher interest rates, sectors less impacted by rate fluctuations, such as industrials, materials and energy, demonstrating resilience in public listings. Conversely, capital-intensive sectors that are more affected by the cost of borrowing, such as health and life sciences, technology, real estate, and financial services, experienced a notable decline in their global shares. 

As interest rates decrease, most of these sectors have seen a resurgence in IPO activity in the first three quarters of this year. Lower rates reduce the cost of capital, making it more appealing for companies in these sectors to raise funds. As the easing cycle begins and other factors take precedence, we are witnessing a gradual broadening across sectors, leaving room for more diversified investment opportunities for buyers.

  • Open image description#Close image description

    The chart is a horizontal bar chart divided down the center, showing a year-over-year comparison of sector global share by IPO proceeds. On the left side of the dividing line, bars represent Q1-Q3 2023 data in grey, and on the right side, bars show Q1-Q3 2024 data in yellow.

    Each bar corresponds to a different sector, and the length of the bars indicates the percentage share of proceeds for that sector. Financials increased from 3% in 2023 to 8% in 2024. Health and life sciences also grew, from 8% to 15%. Energy dropped significantly from 12% to 4%. Technology saw a decline, from 29% to 18%. Industrials fell from 21% to 15%, while consumer increased from 14% to 23%. Materials declined from 9% to 3%, and real estate grew from 2% to 8%. Media and entertainment increased from 1% to 4%, and telecommunications rose slightly from 1% to 2%.

IPO pipelines signal sustained AI enthusiasm 

In the past two years, more than 60 artificial intelligence (AI) companies have gone public annually, with about half turning a profit. Despite similar revenue sizes, those listed in the last 12 months have achieved nearly double the market capitalization of companies listed the previous year. Approximately 50 AI companies are currently in IPO registration; about one-third are profitable. This trend reflects sustained investor interest in AI-driven innovations, despite challenges around profitability.

Q4 2024 IPO market outlook

The remainder of 2024 is expected to see the IPO market influenced by central bank policies, geopolitical developments and key election outcomes. Optimism is fueled by lower interest rates and easing inflation, which are likely to encourage new listings and a resurgence in sectors sensitive to borrowing costs. Strong performance in key markets such as the US, Europe and India is expected to continue. Cross-border listings should continue to thrive, and significant public debuts, especially those backed by PE firms and from spin-offs and carve-outs, are anticipated as they seek favorable public entry points.

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  • Methodology

    The EY organization analyzed IPO data for Q3 2024 (as of 16 September plus expected deals by 30 September 2024) to identify key IPO market trends and the outlook for the remainder of 2024. The analysis utilized data provided by Dealogic, S&P Capital IQ, Mergermarket, PitchBook, Oxford Economics, Refinitiv and EY research. Special purpose acquisition company (SPAC) data is 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 Q3 2024 press release is sourced from Dealogic, S&P Capital IQ, Mergermarket, PitchBook, Oxford Economics, Refinitiv and EY analysis unless otherwise noted. The Dealogic data is 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.   

    Q3 2024 refers to the third quarter of 2024 and covers completed IPOs from 1 July to 16 September 2024, plus expected IPOs by 30 September 2024 (forecasted as of 16 September 2024). Q3 2023 refers to the third quarter of 2023 and covers completed IPOs from 1 July to 30 September 2023. Q1-Q3 2024 refers to the first nine months of 2024 and covers completed IPOs from 1 January 2024 to 16 September 2024, plus expected IPOs by 30 September 2024 (forecasted as of 16 September 2024). Q1-Q3 2023 refers to the first nine months of 2023 and covers completed IPOs from 1 January 2023 to 30 September 2023. 

    • 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.
    • In rare instances where the principal business sector disclosed in an IPO company's annual report differs from the industry classification assigned by Thomson General Industries, the company's industry classification could be adjusted to align with the primary business activities as shown in the annual report. 

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Summary

The global IPO market in Q3 2024 showed cautious optimism despite a 14% dip in year-over-year volumes and a 35% drop in proceeds. EMEIA demonstrated resilience with a 45% increase in IPO proceeds. The IPO landscape is evolving as interest rates ease, with sectors like health and life sciences gaining momentum. Cross-border listings are thriving, while AI-driven IPOs continue to capture investor interest.

About this article

By Paul Go

EY Global IPO Leader

Leads Chinese and multinational companies in client servicing domain. Heads Hong Kong real estate, hospitality and construction sector audit group.

Contributors
Local contact

Partner, Financial Accounting Advisory Services Leader and Head Transaction Accounting & IPO | EY Switzerland

Tobias Meyer is responsible at EY Switzerland for Transaction Accounting and IPOs.