Global IPO activity expected to pick up in 2025; new US policies to impact market: EY report

SINGAPORE - Initial public offering (IPO) activity globally is expected to be on track to deliver a strong performance in 2025 amid a cautiously optimistic economic environment and transformative forces, including the new American political administration.

“Business transformation requires funding, and an IPO offers a powerful avenue to raise the capital needed to drive growth and innovation,” said EY global IPO leader George Chan.

“After a period of slower activity, the global IPO market is regaining its momentum, supported by more favourable market conditions.”

Total IPO activity in 2024 fell slightly short of 2023 levels, with 1,215 IPOs raising US$121 billion (S$165 billion) in funds in 2024, compared with the 1,351 IPOs in 2023 that raised US$126 billion.

In a study by professional services firm EY out on Jan 3, the company found that there is optimism building around 2025 seeing more IPOs, with anticipated policy changes following the US presidential election attracting investor attention.

Mr Chan Yew Kiang, EY Asean IPO leader, said: “Tariffs, tax rates and regulation could have major impacts on the broader economy, mergers and acquisitions, and the IPO landscape.”

Historically, IPO activity has risen in the years following US presidential elections, regardless of which party controls the majority, the report noted.

“Typically, there’s a certain amount of uncertainty in the lead-up to an election. Post-election, there is generally greater clarity in terms of policy direction and economic initiatives, which tends to stabilise market sentiment, creating a more favourable environment for IPOs,” it said.

Industries that are the first to make moves in a post-election year include industrials, financials, and technology, media and telecommunications. But almost all sectors have experienced growth at such times, the report said.

“Under the second Trump administration, increased policy clarity, including potential extensions of the Tax Cuts and Jobs Act provisions, deregulation, and encouragement of domestic production could bolster US IPO activity,” it said, referring to

President-elect Donald Trump’s upcoming second term in office.

Such economic policies, plus a robust stock market, might also make the US market more attractive to other companies like those in Europe considering cross-border listings.

But other issues like significant government restructuring could lead to higher inflation and increased market volatility, causing investors to reallocate funds from equities, the report added.

“Trade protectionism and retaliatory tariffs could increase costs for import-dependent companies, squeezing profitability and deterring IPO activity,” the report said.

“It could also pressure stock markets in trade-surplus countries, including China, Europe, Canada and other emerging regions.”

The direction of US-China relations could also prompt high-profile Chinese companies to pursue IPOs in alternative markets, such as Hong Kong or European exchanges, the report added.

Globally, the technology, media and telecommunications sector is expected to lead the charge in 2025 IPOs, followed by industries, and health and life sciences. 

Specifically looking at the Asia-Pacific, the IPO market in the region is also poised for gradual recovery after a tough 2024, the report said.

IPO activity in this region hit an 11-year low in 2024, with economic, political and geopolitical uncertainty, and restrictive global monetary policies, it said.

“The Asia-Pacific IPO market endured a challenging 2024, but momentum picked up in the second half of the year with a rise in listings and mega IPOs boosting proceeds,” said EY Asia-Pacific IPO leader Ringo Choi.

“This re-invigorated momentum, fuelled by an economic rebound, supportive policies, higher liquidity and growing investor confidence, is expected to strengthen further in 2025.”

Singapore’s IPO landscape is also expected to improve, said Mr Chan Yew Kiang.

A review group was set up last August by the Monetary Authority of Singapore, chaired by Second Minister for Finance Chee Hong Tat, to recommend measures to strengthen the Singapore equities market. 

“As the review group explores strategies and regulatory changes to improve liquidity in the market, as well as more focused strategies to attract companies that are suitable for the market, we should expect to see an increase in interest for IPOs in Singapore from both domestic and foreign companies,” Mr Chan said.