Total European IPO issuance fell by more than a third in 2023, but cautious optimism exists for the year ahead. However, IPO windows are expected to be tight

• Equity markets in Europe and the US have defied expectations for 2023 delivering strong performance. However, the IPO market is yet to catch up.

• For the second year in a row, the European IPO market remained quiet with IPO proceeds raised in 2023 falling to €10.2bn, a drop of 35% compared to 2022.

• The London Stock Exchange was the leading exchange for follow-on issuance in Europe in 2023, contributing 25% of total proceeds.  

• Improving macroeconomic sentiment, growth in equity indices and reduced volatility, together with a growing demand for exits provide optimism for IPOs in 2024. This renewed optimism is, however, tempered by remaining geopolitical uncertainties and upcoming elections, which means the IPO windows may rapidly open and close.

European IPO and follow-on equity issuance market

The proceeds raised from European IPOs in 2023 fell by more than a third (35%) compared to the previous year with global macroeconomic and geopolitical uncertainty contributing to a soft market according to PwC’s latest IPO Watch.

There were 107 IPOs across Europe raising €10.2bn in 2023, a fall of €5.4bn on the previous year which saw €15.6bn raised from 102 IPOs. The last quarter saw €1.7bn raised from 28 IPOs across Europe. The largest listings include the €1.9bn IPO of the Romanian electricity producer, Hidroelectrica, the €935m IPO of the German medical packaging company, SCHOTT Pharma, and the €605m IPO of the German green hydrogen solutions provider, Thyssenkrupp Nucera. The €507m Special Purpose Acquisition Company (SPAC) IPO of Admiral Acquisition on the London Stock Exchange made the top five IPOs in Europe for 2023.  

Stronger than expected equity markets and reduced volatility have created a supportive environment for follow-on equity issuance, which showed resilience during 2023, with proceeds increasing by €6.4bn (8.7%). 

The UK has been the most active market for secondary issuance this year in Europe, raising a total of €20.3bn and contributing 25% of total proceeds.

There is renewed optimism about potential recovery of the European IPO market as we head into 2024, which is supported by improving macroeconomic sentiment, growth in equity indices and reduced volatility, together with a growing demand for exits and a healthy pipeline of issuers. Given the general market uncertainty, IPO windows are expected to be tight - planning for optionality and being prepared to take advantage of these tight windows will be key for prospective issuers.

Spotlight on London 

Despite an active follow-on market in London, it only saw 11 IPOs raising £878m in 2023 as macroeconomic sentiment weighed on new issuance. However, according to the latest PwC economic outlook for 2024, the UK economy is expected to recover from the difficult post pandemic years. And while there remain factors that can change the direction of travel, the overall outlook is more positive for 2024 than was expected twelve months ago. 

In addition, in December 2023, the UK’s securities regulator, the FCA, published its detailed Primary Markets Effectiveness proposals following extensive consultation through 2023. The plan is that the new UK listing regime will be in place in the second half of 2024. These changes are designed to make a listing in London more attractive and add to a more positive outlook for capital markets.

Global IPO and follow-on issuance market

Global IPO activity for 2023 totalled US$121bn from 1047 IPOs - a 31% fall from the previous year which saw $173.3bn raised from 1154 IPOs. Whilst 2023 was a quiet year for global IPOs, some regional markets have delivered significant growth and continued to perform well, including the Middle East, India and Indonesia.

 The largest market for IPOs in 2023 was China, raising $45.3bn, followed by the US ($24bn) and India ($6.6bn).The largest sectors for IPO activity in terms of proceeds raised was Computer & Electronics ($34.4bn), followed by Healthcare ($10.7bn) and Finance ($9.6bn).

Global follow-on equity issuance in 2023 surpassed the previous year with $381bn raised compared to $338bn in 2022. The strong global equity market performance and reduced volatility has allowed established companies to raise significant amounts on the secondary market in 2023.  The US led globally with follow-on proceeds raising $34.5bn in Q4 and $132.7bn overall for the year. Finance ($58.5bn), Computer & Electronics ($55bn) and Healthcare ($53bn) were the top three sectors for follow-on proceeds.

Kat Kravstov, Capital Markets Director at PwC UK, said:

“As investor sentiment turned more positive towards the end of 2023 - due to the improving macro and receding global recessionary fears - major equity indices in the US and Europe have defied expectation producing solid returns. Secondary issuance has remained strong, but the IPO market is yet to catch up. As we look towards 2024, there are positive signs pointing to IPO market recovery, supported by demand for new investment opportunities and exits, leading to a growing pipeline of potential issuers. IPO windows are, however, expected to be tight and planning for optionality will be critical for IPO candidates.

“Momentum is also building in the UK, with the economy expected to turn a corner as inflation normalises and progress is made on growth and real incomes. Together with the upcoming changes in the UK listing rules, this provides optimism for a fund flow reversal to support capital markets.”

Richard Spilsbury, Capital Markets partner at PwC UK, added,

“Despite the success of further offers and volatility trending below historical norms for much of the year, providing ripe conditions for companies to tap into the market, IPOs failed to gain any meaningful traction. The valuation gap persists, with private equity sponsors reluctant to accept lower returns to appease institutional and retail investors who in turn are unwilling to support valuations seen in the post-covid flurry. There is, however, cautious optimism for the year ahead after several significant IPOs in 2023 are now performing well in the aftermarket.”

Ends.

Notes to editors

Reports can be found here:

Europe IPO Watch
https://www.pwc.co.uk/services/audit/insights/ipo-watch-europe.html

Global IPO Watch:
https://www.pwc.co.uk/services/audit/insights/global-ipo-watch.html

All market data is sourced from Dealogic and has not been independently verified by PricewaterhouseCoopers LLP.

Industry classification is based on Dealogic General Industry Group (GIG).