Regional IPO activity is nothing if not volatile. A year ago, Asia-Pacific was miles ahead of the pack, dominating the global market. This year the region has nosedived, taking a back seat to EMEIA — a massive region encompassing Europe, the Middle, East, India and Africa — while the Americas are catching up.
In the second quarter of 2024, when there were 317 initial public offerings worldwide, 196 of them were by Asia-Pacific companies, according to EY, citing data from Dealogic. That accounted for 62% of the global total. Proceeds for those IPOs were $26.1 billion, or 65% of the global total.
The picture was vastly different in the second quarter of this year. Asia-Pacific’s 98 IPOs accounted for just 36% of the world’s total, and their $4.6 billion worth of proceeds was only 6% of the global pie.
Instead, EMEIA scored the most IPOs (128) and greatest proceeds ($14.1 billion) in the recently ended second quarter.
As for the Americas, the number of second-quarter IPOs (45) still lagged far behind the other regions, but the cumulative proceeds of $9.2 billion was about twice what Asia-Pacific companies mustered.
Trends for the entire first half of 2024 were directionally similar, but less pronounced, as the larger portion of this year’s differing results occurred during the second quarter.
EY attributed the falloff in Asia-Pacific’s IPO activity to “a confluence of headwinds,” including geopolitical tensions, elections, economic slowdowns (particularly in mainland China and Hong Kong), heightened interest rates, and a market liquidity drought.
In EMEIA and the Americas, on the other hand, the stronger appetite for equity offering has been buoyed by favorable stock market performance, improving IPO valuations, and growing investor enthusiasm, EY said.
Globally, there was a “leap” in large private equity-backed and venture capital-backed IPOs in the first half of 2024, EY noted. The proportion of total proceeds from such offerings rose from just 9% in the first half of 2023 to 41% in this year’s first half. The trend was particularly pronounced in the Americas, where 74% of total proceeds were attributed to IPOs backed by PE and VC investors.
Looking ahead, the United States looks particularly primed for strong IPO activity over the next couple of years. For one thing, 47% of the world’s “unicorn” companies — privately held ones with valuations of at least $1 billion — are in the United States.
Also, this is an election year in the United States. While presidential elections historically haven’t much affected the U.S. IPO market, activity has often ticked up in post-election years, EY noted. Such years may feature policy changes, economic initiatives, and stabilized market sentiments.
In fact, EY pointed out, this year’s global political calendar is marked by elections for more than 50% of the world’s population, accounting for almost 60% of worldwide GDP.
Election results could “prompt changes in government spending, debt levels, interest rate policies, currency strength, and global supply chains,” EY wrote. IPO candidates should “assess the potential impacts on equity stories and stakeholder interests, and, if necessary, re-evaluate their IPO strategy and timing.
