Initial public offerings (IPOs) were pretty moribund in 2023. According to EY, global IPO volumes drooped by 8% in 2023, with proceeds down by 33% compared with 2022. The global IPO market ended in 2023 with 1,298 offerings, which raised $123.2 billion. Compare this to 2021, which was a gangbuster year for IPOs – boosted by SPACs, IPOs numbered 2436. Proceeds booked $459.9 billion.
Choppy markets, global strife, and rising interest rates did not help. Many people parked money in high interest-rate-bearing accounts, and potential issuers held off with expectations of better times around the corner. So what will 2024 look like? Many people believe things can only get better.
CI received some thoughts on the IPO market from Phil Haslett, founder and Chief Strategy Officer of the private marketplace EquityZen. Haslett had this to say:
“I think you really need to see two things happen before you see the markets pick back up for IPOs. One is you have to see some stability on interest rates and some visibility on what interest rates will look like. And number two is that you’re going to have a couple, hopefully, a couple of Bellwether names that test the market and call it late Q1, that ends up having IPOs that ended trading and stabilizing above their IPO prices, and that I think will kind of open the door for not necessarily a rush of listings, but you know, certainly more than 2023,” predicted Haslett. “Ultimately the money that goes into these IPOs comes from pretty much the same place each time. There’s a host of really large, you know, money managers, like places like Fidelity and T. Rowe Price. You know, BlackRock, they’re gonna go to a lot of money things and they’re the same folks that are going to put in money to the, you know, the venture-backed IPOs as well.”
Haslett said he expected lockups to keep newly public shares limited so prices could move up quickly for issuers.
“I think we all get caught up in the headline numbers of what these companies are worth when they go public,” he said.
Haslett added that he does not foresee anything AI-related for a while because [those] companies are just so young.
“I’d probably screen for like, the company that’s been private for more than 10 years. That indicates that it wants to go public soon, that has indicated that it’s profitable or close to being profitable and has some brand value, and Reddit really comes to mind there across those dimensions.”