The IPO market experienced a decline in 2024, with the total number of IPOs dropping by 10% to 1,215 compared to the previous year. The total transaction value also saw a decrease of 4%, amounting to $121 billion. This downturn is particularly pronounced in Asia, where deglobalization trends have significantly impacted market activity, especially in China.
Ernst & Young (EY) highlights these regional disparities, noting that while Europe and the USA saw increased capital investment in IPOs, Asia faced a considerable slump.
The IPO market in the United States demonstrated resilience, with 183 transactions recorded in 2024, a substantial increase from 127 in 2023. The total volume of these transactions surged from $22.2 billion to $32.7 billion, reflecting a robust recovery in investor confidence.
Conversely, Europe experienced a slight decline in the number of IPOs, falling from 148 to 125. However, the issue volume in Europe rose significantly from $13.5 billion to $19.1 billion, indicating a shift in investor sentiment towards higher-value offerings.
China's IPO market faced a severe contraction, with the number of IPOs plummeting by more than half, from 387 to 170. The transaction value in this region also suffered a staggering 65% drop, falling to just under $20 billion. This downturn positions China as the hardest-hit market among major stock exchanges, underscoring the challenges posed by ongoing deglobalization trends.
The dramatic decline in IPO activity in China raises concerns about the long-term viability of its capital markets, especially as investors seek more stable environments.
In terms of sector performance, technology companies continued to dominate the IPO landscape, accounting for 211 IPOs worth over $23.6 billion. This trend underscores the ongoing investor appetite for innovative and high-growth sectors, particularly as digital transformation accelerates across industries.
Following technology, the "advanced manufacturing" sector also showed strong performance, with 174 IPOs generating a total value of $9.2 billion.
Private equity and venture capital funds played a significant role in the IPO market, contributing to nearly half of the total transaction value. In 2024, these funds accounted for 12% of all IPOs and a remarkable 46% of the placement volume. This trend indicates a growing trend of companies transitioning from private to public markets, driven by the need for capital to fuel expansion and innovation.
Switzerland's IPO landscape was marked by a single classic IPO, Galderma, which managed to secure a remarkable fifth place globally with a transaction value of $2.6 billion. Other notable transactions included Lineage Inc (USA), Midea Group (China), Hyundai Motor India, and Puig Brands (Spain), which all surpassed Galderma in terms of transaction size.
Looking ahead, there is cautious optimism regarding the revival of capital markets in Switzerland and globally. The recent significant interest rate cut by the Swiss National Bank has sparked hopes for increased IPO activity in 2025. However, concerns about the potential return of negative interest rates linger, as these could pose challenges in the fight against a strong franc and deflation risks.
The outlook for global markets remains positive, bolstered by the current "Santa Claus Rally" in many regions and low volatility levels. Analysts suggest that the anticipated deregulation in the US and efficiency gains from artificial intelligence could further stimulate the IPO market. However, the potential impact of announced trade tariffs may introduce new uncertainties, particularly for companies looking to navigate the complex landscape of international trade and investment.
As the IPO market continues to evolve, the interplay of regional dynamics, sector performance, and macroeconomic factors will play a crucial role in shaping the future of capital markets. Investors and companies alike will need to remain agile and informed to capitalize on emerging opportunities in this ever-changing environment.