(Bloomberg) -- Improving market conditions and a backlog of private equity sales are setting the stage for a busy 2025 in equity capital markets, with initial public offerings likely to pick up across regions, according to consultancy Ernst & Young.
“My expectation is that the global IPO market is going to be much better next year, although performance will vary from company to company,” George Chan, EY’s global IPO leader, said in an interview.
Companies worldwide have raised a combined $110 billion through first-time share sales so far in 2024, about 8% below this time last year, according to data compiled by Bloomberg.
While some of this year’s largest IPOs have come from buyout firms, the overall pace of private equity exits has been slow, meaning there is much more supply coming down the pipe.
Carlyle Group Inc. is working with advisers on a potential listing of Swiss luxury-watch parts maker Acrotec Group slated for next year, Bloomberg has reported.
BC Partners told Bloomberg last week it could list two or three more companies over the next 18 months after taking Springer Nature AG & Co. public earlier this month.
“Private equity investors have been holding onto some companies for much longer than they had wanted to, so if they see an opportunity, they will list these companies,” said Chan, who’s been at EY since 2006.
However, whether IPOs are successful “will depend on the profitability of individual companies as investors want to see a proven track record,” he said.
Share Sale Resurgence
While a drop in Asian deals has weighed down on global IPO volumes, the United States and continental Europe have seen a resurgence in first-time share sales this year, with bankers still trying to price a bunch of deals ahead of an anticipated slowdown around the US presidential election. The trend is likely to resume in the new year, aided by declining inflation and interest rates, Chan said.
Meanwhile, markets like Hong Kong and the UK, which have seen fickle activity in the last couple of years, are tipped to feature more prominently in the months ahead, he added.
“While the US election could affect the timing of IPOs, it is not expected to significantly impact the overall willingness of most companies to go public,” Chan said.
Cloud computing firm CoreWeave Inc., fintech group Chime Financial Inc. and buy-now-pay-later giant Klarna Bank AB are all planning potential New York listings next year, Bloomberg has reported.
Dealmakers in the Asia-Pacific region are also likely to be busy. Last month, Hong Kong hosted Chinese appliance giant Midea Group Co.’s $4 billion IPO, the world’s second-largest this year and the first billion-dollar float on the local exchange since 2022.
There are more deals in the pipeline, Chan noted. China Resources Beverage Holdings Co. and Horizon Robotics Inc. are due to start trading in Hong Kong this week.
Chan also pointed to efforts by China to stimulate the economy and revive stock trading as a positive sign, despite potential tariffs on Chinese exports.
AI chip designers Shanghai Enflame Technology Co. and Shanghai Biren Intelligent Technology Co. are both planning debuts on Shanghai’s STAR board, Bloomberg has reported.
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