The global equity capital markets have experienced their most robust start in three years, amassing $143.9 billion in stock sales as of 2024, marking the highest first-quarter performance since 2021. This surge is attributed to diminishing economic uncertainties and a bullish stock market. However, the resurgence in initial public offerings (IPOs) has not kept pace, with IPO volumes remaining stagnant compared to the previous year and falling short of the early 2022 levels, with only $22.4 billion raised so far.
Anticipation is building around future stock listings, fueled by predictions of interest rate cuts. Bankers and investors are optimistic, expecting an upswing in IPO activities in the coming months, leveraging the momentum from successful recent deals. According to Edward Sankey, HSBC's global head of equity capital markets, the U.S. has seen a solid start, Europe is on the rebound, and the Middle East is poised for activity post-Eid.
Recent IPOs have seen mixed reactions from the market. Shares of Reddit and Astera Labs experienced significant gains, driven by investor interest in artificial intelligence. Galderma, representing Europe's largest IPO since Porsche in September 2022, also enjoyed a strong debut. In contrast, German perfume retailer Douglas saw its shares tumble upon listing. The challenge appears more pronounced for mid-cap companies, which are finding it increasingly difficult to go public.
Investors are looking for consistent returns from IPOs before committing more capital, highlighting the need for a series of successful deals. Tom Swerling, Barclays' global ECM head, emphasizes the importance of performance and investor returns in the next set of transactions for the IPO market to fully recover.
Despite some setbacks, the outlook for IPOs remains positive, with expectations of more deals materializing this year. The U.S. election is likely to narrow the IPO window in the latter half of the year, yet quality IPOs are anticipated post-Easter. Companies such as CVC Capital Partners, Golden Goose, and cybersecurity startup Rubrik are gearing up for public listings in the near future.
Public share sales are set to dominate the market activity in the upcoming months, with companies leveraging high stock prices to raise capital. Notable sales include those by Haleon, Keurig Dr Pepper, and the London Stock Exchange Group, totaling $97.4 billion. Additionally, the potential sale of further shares in Saudi Aramco could significantly impact Saudi Arabia's economic diversification efforts.
European nations like Germany, Greece, and Italy are also exploring block trades to offload stakes in banks and utilities, keeping bankers engaged as the IPO market regains its footing.
