• Big IPOs more likely in 2025 despite strong equity drivers
• Issuers concerned about running alongside US presidential election

Equity capital markets are quite often tumultuous with deal opportunities few and far between for issuers, no matter how high quality their offerings. This is not one of those times.

Deal conditions are good, with equity indices strong and Fed rate cuts round the corner, but sources say IPO issuers are reluctant to come to market.

One senior US ECM banker noted that September had been expected to be one of the busiest months for IPO issuance but that deals could now be deferred to 2025, or at the very least later in the year.

In the US, StubHub and Klarna, two of the potential star names for 2H, may be more likely in 2025 than this year, according to sources and, in the case of Klarna, its CEO in an interview with the Financial Times.

A source close to StubHub said no final decision had been made on timing and everything was being taken into consideration. StubHub declined to comment on IPO timings.

There are still some names that could hit US markets this year such as AI firms Cerebras and Pony ai, according to Dealogic’s US IPO pipeline and numerous reports, alongside technology and supply chain business Ingram Micro.

Fewer big deals in Europe

In Europe, Germany’s Springer Nature and Polish retailer Zabka Polska lead a smaller IPO cohort than perhaps had been hoped for.

There are also possible listings for Cirsa Gaming in Spain and Applied Nutrition in the UK later in the year, although there are fears that any deal scheduled for 4Q might slip into 2025.

The flow of new listings will mark a quieter end to a year that started with the mega listings of CVC [AMS:CVC], Galderma [SWX:GALD] and Puig [BME:PUIG].

“The market backdrop is good, meaning that September could be a good window,” said one ECM banker. “Still, IPOs are no less difficult than in the past few months. That is just the reality. In Europe, I would not expect many IPOs between now and end of the year.”

“The US IPO market is usually more active, but there are not that many deals out there either,” he said.

Several European sources noted that most major activity has been delayed, with issuers that might have been thinking about an IPO this year focusing on 1H25.

Source: Dealogic

Fed adds to equity momentum

A good year for equities overall is set to continue, with the US Federal Reserve all but certain to cut interest rates in September.

Rates traders see it as just the start of a rapid pivot with most foreseeing a drop in the Fed Fund rate to between 325bp and 375bp by next June’s meeting down from the current target rate of 525bp to 550bp, according to CME FedWatch.

Aligned with strong fundamentals, IPOs that have priced are also largely performing. ECM Pulse’s sister column ECM Explorer highlighted last week that EMEA IPOs so far this year have generated over USD 4bn of profit for investors and cumulatively have generated about 22% of alpha YTD, massively outperforming European indices and even outperforming the US Nasdaq and S&P 500 YTD.

In the US, IPOs have generated cumulative profit of about USD 5.5bn, a return of more than 20% for the market, in line with European stocks and slightly above the US benchmarks YTD.

Source: Dealogic

“With indices at or near all-time highs, a relatively healthy consumer and general macroeconomic strength, market volatility and inflation readings under control, and the market anticipating imminent rate cuts, IPO activity levels ‘should’ continue to improve,” said Mark Schwartz, EY Americas IPO and SPAC Advisory Leader.

Election jitters

The 2H issuance window has an obvious roadblock in November in the form of a contentious presidential election between US Vice President Kamala Harris and former President Donald Trump. There remain fears that any deal pricing around the election might be caught in an unexpected bout of electoral turbulence, as happened to some European IPO candidates during France’s snap parliamentary elections earlier this year.

With election and geopolitical tensions looming, prospective issuers and bankers are conveying caution about the remainder of the year, Schwartz said. “But conviction seems to be building around a stronger IPO market next year,” he added.

Most US and European dealmakers noted that the election had shortened this autumn’s IPO window with issuers careful not to run too close to the vote. But, even so, there seems to be a strong trend among most issuers, on both sides of the pond, to delay until 1H 2025 rather than try a deal before the election.

“Lots of issuers we work with have found they just aren’t ready to go right now, often it just takes more time to do an IPO than people realise,” said a European ECM banker. “Companies were targeting 2H but then realised they weren’t ready to launch at the start of September and didn’t want to run up against the US election in November so are pushing back to 2025.

“I think in many cases it’s a timing and preparedness question rather than avoiding the market.”

Still seeking the perfect price

Two ECM investors suspected that many sellers were still not willing to deal at market prices.

“It’s all down to valuation,” said one, adding that they were being told that issuers were happy to wait.

“It’s a risk to wait until 2025. You have no idea what is around the corner as we have seen so many times in the past,” the investor said. “Many sellers just aren’t ready to take the prices that the market is offering yet, but I hope more will get there soon.”

While it is understandable that sellers want a good exit price, some might be wise to look at the European IPOs of Galderma and CVC or some of the big US listings this year to see examples of vendors that may have had to be more generous than they perhaps would have liked in their initial IPO pricing, but now sit as major owners of far more valuable companies as the stocks have traded up. In the case of Galderma, EQT managed to sell a 6% stake in the Swiss skincare company overnight on 3 August at CHF 75 a share, around 40% higher than its IPO price of CHF 53 a share.

Waiting for any IPO window runs the risk of events delaying plans even more, as the 2022 IPO class can attest to after having deal plans derailed by Russia’s invasion of Ukraine – both Galderma and CVC were originally scheduled for 2022 with the listings then delayed by two years following the start of the war.

Despite the famous saying, in a volatile world, it’s not just good things that come to those who wait.