IPOs Surge in the Americas as Private Equity Looks to Boost Exits, AI Startups Flow to Public Listing Stage

Global IPO activity showed signs of life in Q1, raising more funds with a smaller number of new listings versus the same period in 2023. In the Americas, however, both the tally of IPOs and the amount of fundraising surged YoY. The past two years have seen initial offerings tumble precipitously from record volume in 2021, but that softening of activity has resulted in a buildup of valuable companies in the pipeline awaiting more hospitable conditions for an IPO. This year may be the time for public listings to begin their rebound.

Private equity-backed firms comprised five of the top 10 largest IPOs in the first quarter. A long-awaited revival of IPO exits in the PE industry could be a significant catalyst in bolstering equity market sentiment. A wave of AI startups have become a preferred investment for venture capital over the past year and are just now coming to the IPO stage. Equities investors are excited to allocate to AI, but very few machine learning-focused companies are publicly traded. This could result in a bottlenecking of capital into a relatively small number of AI IPOs throughout 2024.

Related ETF & Stocks: Renaissance IPO ETF (IPO), Astera Labs Inc (ALAB)

Per data from Ernst & Young (EY), the global IPO market saw 287 deals raise $23.7 billion in Q1, equivalent to a -7% decrease in the number of new listings, but a 7% increase in proceeds. That seems to suggest IPO growth was a wash for the quarter, but those figures were dragged down by a significant drop off in new Asian listings (likely driven by an ongoing Chinese regulatory crackdown in financial markets) while initial offerings in the Americas boomed. IPOs in that region tallied 52, up 21% from Q1 2023, and raised $8.4 billion – a massive 178% gain. Further, EY notes that each of the top seven deals in the quarter raised over $500 million, versus just one in Q1 2023.

154 companies went public in the US in all of 2023, down -15% percent from the 181 firms that had launched an IPO in 2022. Last year’s final tally was the smallest number of annual listings in seven years. According to Barron’s, the combined number of 2022 and 2023 IPOs marked the slowest two-year period for new issues in more than 40 years, and did not even reach a third of the record 1,035 public listings that went ahead in 2021 alone. That year, defined by near zero overnight rates at the Fed, a massive increase in the money supply, and all-time highs in key equity indices like the S&P 500, was prime time for companies to quickly capitalize on a tidal wave of liquidity in the US and beyond. Bloomberg reports that $26.2 billion was raised on US exchanges via IPOs last year, a modest bump from last year, but still a -92% plunge from 2021.

A critical pillar of any potential IPO market recovery will be an expansion of private equity (PE) exits, which…