“Despite a quiet summer, the IPO market is currently being tested by a few large IPOs in Europe, three of which are private equity-backed, demonstrating continued sponsor appetite for IPOs. With a backdrop of stabilising equity capital markets and a significant backlog of maturing PE-backed investments, we expect to see increased IPO and follow-on equity issuance activity from the sponsors in 2025. The focus will be on achievable valuations and post-IPO performance.
The UK capital markets has also witnessed a generational change with new listing rules now in place designed to attract more companies to IPO in London. The impressive aftermarket performance of the 2024 UK IPOs, coupled with a few further IPOs expected to test the market in 2024 should instil confidence in the growing IPO pipeline targeting 2025.”
Vhernie Manickavasagar
Partner, UK IPO Leader
Key themes
Capital markets and macroeconomic overview
Broadly positive index performance, particularly in developed economies, reflects the growing optimism that inflation has been managed without significant economic damage, creating space for central banks to cut interest rates as seen in the UK, US and EU. Strong equities performance and low volatility create a supportive environment for IPOs.
Historical performance of major equity indices YTD 2024
Equity indices have seen broadly positive performance in Q3 2024 with the DAX 30 and JSE up 13% and higher, the Stoxx 600 and FTSE 100 up 7% higher and the S&P 500 up 21% for the year. The TASI, the leading stock market index in Saudi Arabia, has been flat for the year driven by the lower oil prices which have dropped to under $70 (USD/Bbl) as of 30 September 2024. The VSTOXX Volatility index spiked in August 2024 due to concerns over an economic slowdown in the US and an increase in Japanese interest rates, stabilising in September to more normalised levels.
IMF data shows that Africa is forecasted to have the highest GDP growth rate over 2024 at 3.5%, followed by the Middle East (2.5%) and Europe (1.4%). Inflation has been falling across all regions in EMEA in Q3, except for Africa. This has allowed central banks, particularly in developed economies, to start easing their respective monetary policies, which creates a more favourable environment for IPOs and M&A activity due to the impact of interest rates on valuations and the cost of financing.
EMEA IPO trends and outlook
Overall, whilst Q3 2024 IPO issuance volume and value in EMEA saw a decline in Q3 compared to previous quarters, there have been 3 large IPOs pricing in the Middle East this quarter.
The IPOs from the Middle East dominated in Q3 delivering $1.7bn of issuance from 18 IPOs in the third quarter. While the IPO pipeline in the Middle East remains robust, with notable ongoing diversification away from the energy sector, investors will be closely monitoring the broader macroeconomic and geopolitical environment, particularly the trajectory of oil prices. IPO activity is expected to continue in the KSA and UAE with growing momentum in the Oman IPO market.
In Q3 2024, Europe experienced a quieter period for IPO activity, primarily due to the numerous elections and regulatory changes that occurred over the Summer including the UK, France and EU elections. These events likely led many companies to delay their IPO preparations as they awaited a clearer political landscape and a reduction in market volatility.
A UK sports nutrition company launched its IPO in Q3 and is expected to IPO in Q4 2024 at a c.£500m valuation. Looking ahead, reform of the EU Prospectus Regulations is back on the agenda in Europe, with the aim of making Europe’s capital markets a more attractive venue by simplifying the regulations and increasing liquidity.
EMEA IPO activity (Q1 2022 to Q3 2024)
Europe IPO activity (Q1 2022 to Q3 2024)
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