Navigating through a complex economic and geopolitical landscape, marked by the start of a global interest rate easing cycle, Q3's IPO activity 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 report.

The persistently lower private equity and venture capital (PE and VC) exit activity over recent years has created a growing backlog of portfolio companies poised for monetization. A resurgence in PE-backed mega IPOs and VC-backed unicorns is taking shape, as current valuation levels become more favorable for launching mature, high-value portfolio companies into the public market. In the first nine months of 2024, PE and VC-backed IPOs made up six of the top 10 global IPOs, accounting for over one-third of the total global IPO proceeds. In the Americas, these IPOs accounted for 52% of the total proceeds, underscoring a greater willingness among PE and VC firms to exit in the current IPO landscape.

Cross-border listings have also seen a significant uptick. In the first three quarters of this year, 77 companies chose to list abroad, up from 64 in the same period last year, a 20% YOY increase. Since 2023, foreign-domiciled issuers have represented approximately 52% of IPOs on US exchanges, reaching a 20-year-high. Concurrently, with a contrasting stock market performance between the US and China this year, the market value gap between the two countries has reached a record high in Q3.

Americas and EMEIA rally as Asia-Pacific stabilizes

Year-to-date (YTD), the Americas and EMEIA have shown double-digit growth by both deal number and proceeds compared to the same period last year, despite a global reduction in public offerings owing to the Asia-Pacific's IPO pause in the first half of the year. The US and India have notably maintained high levels of IPO activity, even during a typically quieter quarter. India launched more than 100 IPOs in Q3, marking its highest level of public offerings in a single quarter in over two decades.

Asia-Pacific has made a notable turnaround in the third quarter. By overcoming earlier declines, the region has contributed to an 11% QOQ increase in global IPO numbers. This rebound, marked by increased activity in mainland China, Indonesia, Malaysia and South Korea, has injected confidence into the global market during a period of heightened uncertainty.

AI companies attract investor interest

Over the past two years, more than 60 artificial intelligence (AI) companies have gone public annually, with about half turning a profit. Approximately 50 AI companies are currently in IPO registration, demonstrating sustained investor interest in AI-driven innovations.

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 support IPO activity. 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.

George Chan, EY Global IPO Leader, says: "Investors are gearing up for a more volatile second half of 2024. As inflation and interest rates recede, other emerging factors are taking precedence in influencing IPO decisions. In this environment of heightened uncertainty, well-timed market entries and compelling equity narratives are crucial for businesses looking to capitalize on IPO opportunities."