(News Bulletin 247) – The global IPO market experienced a slight slowdown this summer, notes EY in its latest quarterly update. The end of the year promises to be more dynamic with interest rate cuts and an easing of inflationary pressures, two factors which are likely to encourage new listings.

Summer is a traditionally quiet time in the IPO market. And this year was no exception, since a “slight slowdown” was observed over a year, due to the reluctance of market players who favored a cautious approach in the face of rising uncertainties, notes EY in its latest “EY Global Trends Q3 2024” report.

In the third quarter, 310 IPOs around the world were recorded by the firm, for a total amount raised of $24.9 billion. This activity is down 14% in volume and 35% in value compared to the $38.3 billion raised in the third quarter of 2023.

“Resilience in a context of uncertainty”

But from one quarter to the next, the trend is much better, reports EY. This summer, the number of operations is 11% higher than the 279 IPOs carried out in the second quarter worldwide.

“This resilience has emerged against a backdrop of increased uncertainty, fueled by weaker economic data, increased market volatility, the impending US presidential election and ongoing geopolitical tensions,” continues market specialist George Chan IPOs at EY.

The United States still manages to fuel the flow of arrivals of new companies. Some 130 transactions were carried out over the first nine months of 2024 in the country, for $19.4 billion, an increase of 29% in volume and 40% in value over one year.

“The healthcare, life sciences and technology sectors continue to dominate IPO activity in terms of number of deals and amounts raised,” says EY. This contingent could have been larger, but EY recalls in this regard that many large technology companies have chosen to delay their IPO and rely on private financing while waiting for conditions to improve on the financial markets.

The dynamism of the Indian market

What about the wider Europe, Middle East and Africa (EMEIA) region? Since the start of the year, EY has counted 394 IPOs which have raised 30.3 billion euros, an increase over one year of 36% in number and an increase of 45% in value.

The firm notes that this geographical area was the scene of five of the ten largest IPOs globally. The firm cites the IPO of Swiss dermatological care specialist Galderma, which enabled it to raise 2.3 billion Swiss francs.

EY also mentions the IPO of the CVC investment fund which managed to raise at least 2 billion euros in April, which at the time constituted the largest IPO on European soil since the beginning of the year.

India particularly stands out, with many operations facilitated by a much more favorable stock market climate. Since the start of the year, 260 IPOs have been carried out in the country, for $9.4 billion raised. This is 73% more in volume and 134% more in value compared to the first nine months of 2023.

In August, Ola, India’s leading electric scooter maker, raised $734 million on the Bombay Stock Exchange, marking the country’s largest IPO since Life Insurance Corp of India in May 2022.

In the third quarter alone, more than 100 IPOs enlivened the Indian market, which marks the highest level in a single quarter in twenty years, notes EY.

Optimism for the end of 2024

As far as France is concerned, the results are still very mixed. Only two companies not resulting from a split have tried their luck on Euronext Paris since the start of the year. The first being the project management software publisher Planisware in April, followed by the arrival of the defense gem Exosens in June.

Both companies benefited from the relaxation of IPO rules at the start of the year. Companies wishing to join the Paris market are no longer obliged to reserve part of their shares for individual investors. Previously, they had to offer small holders a minimum of 10% of the overall amount of the operation.

On the other hand, on the small and mid-cap side, no IPO was recorded on Euronext Growth. However, it was this same section of the listing that drove the IPO market last year.

For the remainder of 2024, EY recalls that central bank policies, geopolitical developments and the results of major elections, particularly in the United States, will be key topics for the IPO market.

The firm is optimistic for the end of the year, with falling interest rates and easing inflation likely to encourage new listings and a recovery in sectors sensitive to borrowing costs.

“The strong performance of key markets such as the US, Europe and India is expected to continue. Cross-border listings are expected to continue to be strong and significant IPOs are expected, particularly those that are backed by private equity firms and those that are spin-offs, as they seek favorable entry points,” concludes George Chan.