Market volatility sees IPO activity come in under expectation
Initial public offering (IPOs) across the globe were up in both value and volume terms during the first quarter of this year but 'not to the extent that might have been forecasted' as IPO activity in Ireland remains 'subdued', a new report by consultancy firm EY shows.
According to the report, between January and March, the global IPO market saw a 20% growth in value to $29.3bn (€25.74bn) compared to the same period in 2024. In total, there were 291 IPOs across the globe during this period with the US experiencing the third-strongest first quarter performance in its history, with 59 listings.
However, while deal values and volumes were up over the same period in 2024, EY Ireland corporate finance partner, said global financial markets have 'more recently been impacted by heightened volatility and uncertainty, with a knock-on impact on the IPO landscape for upcoming quarters'.
'Positively, IPOs were up globally in terms of both volume and value in the quarter, although not to the extent that might have been forecasted even at the start of the year.'
Mr McAleavey said that although IPOs held firm overall 'heightened volatility readings and a shaky outlook may now signal faltering investor sentiment for near-term future listings' adding that a number of high-profile companies planning to list in the first half of 2025 have now delayed their IPOs to later quarters or even early 2026 as they 'wait for markets to settle'.
On Irish IPO activity, Mr McAleavey said it remains 'subdued' as firms continue to raise private capital for investment or to seek an exit for shareholders.
While the immediate landscape appears quite unsettled, continued interest rate cuts by the ECB, together with more market stability in Europe could spur activity here in the domestic market.
EY Ireland said the outlook for the rest of the year remains unsettled as a result of the uncertainty rippling global markets.
'Those that have already listed in the first quarter are demonstrating varied aftermarket performance,' the company said.
'The new US administration's policy changes have created opportunities and risks.'
'Despite the challenges posed by geopolitical tensions, mounting trade tariffs, a cooling economic outlook, rising inflation risks, and short-term market volatility, there are positive indicators such as a robust global IPO pipeline and targeted government support to key sectors.'
EY said that the industries sector, which includes aerospace and defence companies, is experiencing a surge in investment globally due to heightened defence spending, which could boost IPO activity in this sector.
However, new policies from the US administration have also led to a chilling effect on environmental, social, and governance (ESG) efforts, as companies grapple with an uneven regulatory landscape across markets.
The company also noted that AI is emerging as a transformative force in the IPO landscape significantly influencing companies' growth trajectories.
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