Home Brokerage A Comeback for the European IPO Market: What’s Ahead After a Promising Start to the Year?

A Comeback for the European IPO Market: What’s Ahead After a Promising Start to the Year?

by internationalbanker

By Kat Kravtsov, Capital Markets Director, PwC UK





After a two-year pause, 2024 saw the strongest start to a year since the IPO (initial public offering) boom in 2021, with several high-profile transactions, such as Galderma, Douglas and the recently priced listings of Puig and CVC, signalling an IPO-market recovery for the year ahead.

According to our recent “IPO Watch EMEA: Q1 2024” publication, the European IPO market experienced a remarkable resurgence in the first quarter (Q1) of 2024, with nearly €5 billion worth of IPOs, according to S&P Global Market Intelligence data. Private equity (PE)-backed IPOs have played a prominent role in this resurgence, with three out of the top five IPOs in the region being backed by private equity. The IPO pipeline for the remainder of 2024 also appears healthy, indicating a sustained recovery is underway. Regarding sectors, the consumer and luxury segments have stood out, whilst the pipeline remains diversified. So, what is driving the IPO market’s recovery? This article explores key themes and the outlook for the remainder of 2024 and beyond.

What are the key drivers of the recent IPO market rebound in Europe?

Following the pandemic and the IPO boom of 2021, the markets were dealt a series of economic shocks, including geopolitical tensions, that caused spikes in energy prices and inflation, with central banks across the globe raising interest rates in unison. This caused significant market uncertainty, creating unfavourable conditions for the IPO market and widening the valuation-expectation gap between investors and issuers. 

The sentiment, however, turned more positive towards the end of 2023, with the IPO market’s recent recovery driven by several factors. One key aspect is the stabilisation of the macroeconomic landscape, with European economic-growth resilience supported by falling energy prices and rebounds in global manufacturing activity, together with inflation trending down towards the European Central Bank’s (ECB’s) 2-percent target, indicating that potential interest rate cuts may follow. Increasing economic confidence has resulted in strong equity-market performance, with the STOXX Europe 600 reaching an all-time high this year. The volatility index also remained at more normal trading levels below 20 throughout the first quarter of 2024, supporting secondary equity-issuance markets.

This positive outlook has boosted investor confidence, creating the necessary pre-conditions for a functioning IPO market, and together with a backlog of demand for exits, this has provided a window of opportunity for issuers and sellers looking to test the market.

The rise in private equity-backed IPOs points to a further appetite for new listings

Macroeconomic headwinds and rising interest rates have reshaped the private equity (PE) exit landscape since 2021, with IPOs being a less prominent route over the last two years and PE firms choosing to hold on to their investments for longer rather than accept lower valuations. This has created a significant backlog of maturing PE investments. In fact, global PE assets under management (AUM) are currently at a record value of more than $5 trillion, according to PitchBook data, highlighting the substantial backlog of unrealised value. However, the recent stabilisation of equity-capital markets provides a window of opportunity for further PE-backed IPOs. As pressure builds to realise value, we expect a more active IPO market for PE-backed assets. A significant PE overhang remains amongst 2021’s PE-backed IPO class, which will further drive follow-on equity-issuance activity in 2024 and beyond.

What are the global IPO trends?

From a global perspective, whilst Western IPO markets reopened in Q1 2024, global IPO values were down in the first quarter compared to the equivalent period in 2023, with a 6-percent or $1.3-billion reduction in value compared to Q1 2023, according to data from S&P Global Market Intelligence. This first-quarter decline was mainly driven by the weakening in the Asia-Pacific (APAC) region, where IPO proceeds were down by 48 percent to $7.6 billion in Q1 2024 versus $14.6 billion in Q1 2023. The boom in India’s stock market in 2023 continued into Q1 2024, with $2 billion worth of IPOs in the first quarter of 2024. In the Middle East, there has been a noticeable shift away from oil and gas to other industries, reflecting a maturing market that may have a broader appeal to international investors in the future.

Considering IPO trends globally, the performances of IPO markets in Europe and the United States are driven primarily by the global macroeconomic environment, with Western markets showing positive signs of reopening. By contrast, IPO activities in other regions, such as the Middle East and India, tend to be determined more by local factors, such as domestic growth.

What lies ahead for IPOs in the second half of 2024 and beyond?

Optimism surrounds Western IPO markets through 2024 and into 2025, fuelled by a growing pipeline, robust market performance, lower volatility, improving inflation outlook and several successful IPOs in the first quarter. We expect a diverse pipeline of issuers to support a second-half-weighted IPO window, whilst quality, valuation and the “must-have” status of these IPOs will continue to drive investment decisions. This optimism, however, could be tempered by geopolitical uncertainties and elections, with 2024 set to be the most influential election year in history.

We also expect to see further innovation from the IPO-structuring perspective that we have seen in recent years, including fixed-price IPOs, smaller free floats, accelerated IPOs with compressed marketing timetables and the introduction of more alternative funding mechanisms, such as convertible instruments, which could continue to gain traction alongside the classic IPO process.

2024 may also be a pivotal year for the London IPO market, with a gradually improving outlook and several significant changes to the UK listing regime that are already underway. These changes are aimed at increasing the attractiveness of the London market for listings and providing a more favourable environment for companies considering going public. We are also witnessing increasing interest from boards and issuers who are considering their options to explore a London listing, including both domestic and international companies.

Fortune will favour the ready

Preparing to take advantage of an opening IPO window will be key for prospective issuers. From the initial strategic-planning considerations, early IPO readiness assessments and various preparations through the intensive phases of transaction execution and pricing, the process can take around 24 months, so careful coordination and planning are critical for a successful transaction. In quiet markets, companies are focused on readiness and being “fit for listing” by improving their reporting environments and controls as well as enhancing ESG (environmental, social and governance) disclosures. You can further explore our PwC IPO journey tool designed to help you navigate the listing process and prepare your business for life as a public company, regardless of the market on which you choose to list.

Rapid coverage of recently priced IPOs demonstrates how there remains significant investable cash that investors hope to put to work; however, quality and stock fundamentals are front of mind for IPO investors. Unlike in the earlier IPO boom market that was mainly fuelled by pre-revenue, fast-growth tech companies, companies that are planning to list now should focus on demonstrating a solid track record of profitability. There will be value in planning for optionality, such as considering a dual track and creating tension in the price-discovery process. In addition, companies and selling shareholders should accept the new realities of a reversion of valuations to more historical pre-2021 levels.

In conclusion, the IPO market in Europe is clearly entering a recovery phase, with a robust start to the year and largely positive aftermarket performance. As we move into the second half of 2024, the IPO market is expected to continue its recovery path, provided the favourable market conditions we have recently enjoyed continue.



Kat Kravtsov is a Director of the Capital Markets team at PwC. With more than 16 years of experience in investment banking and capital-market advisory, Kat previously worked with UBS and Goldman Sachs Equity Capital Markets. Kat specialises in IPOs and deal readiness and has extensive experience advising management teams on preparing for equity capital-market transactions.


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