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Equity share sales in Q1 reach highest level since 2021

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IPO volumes in Q1 flat on same period last year

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Bankers hopeful of IPO revival this year

By Pablo Mayo Cerqueiro and Echo Wang

LONDON/NEW YORK, March 27 (Reuters) - Dealmaking in

global equity capital markets had its strongest start in three

years in 2024 as economic uncertainty waned and stocks rallied,

but a revival in initial public offerings has lagged.

Bankers carried out $143.9 billion of stock sales worldwide

so far this year, the best first quarter since 2021, according

to Dealogic data.

However, IPO volumes were flat on the same period last year

and less than half the levels seen in early 2022, with $22.4

billion raised in the first quarter so far.

With interest rate cuts forecast, bankers and investors

expect more stock listings in the months ahead, building on the

success of earlier deals.

"The U.S. has had a reasonably strong start, Europe feels

like it's coming back, and the Middle East will continue to be

busy, especially after Eid," said Edward Sankey, global head of

equity capital markets at HSBC.

Shares in social media platform Reddit ( RDDT ) and

technology group Astera Labs ( ALAB ) soared after making their

debut in New York last week, tapping into investor enthusiasm

for artificial intelligence.

Swiss skincare group Galderma, Europe's largest IPO

since Porsche in September 2022, had a stellar start, trading

18% above its issue price on its first day.

Not all new stocks have had the same warm welcome. The newly

listed shares of German perfume retailer Douglas

plunged on their debut last week.

While investors are happy to pay up for large, attractive

companies, mid-cap firms like Douglas are finding it harder to

go public, according to a Europe-based fund manager, who spoke

on condition of anonymity.

Investors need to have some success stories before putting

much more money to work.

"We need to see this cohort of deals perform, and we need

consistency of investor returns in the next tranche of

subsequent transactions before the IPO market fully reopens,"

said Tom Swerling, global ECM head at Barclays.

IPO RECOVERY

Despite the setback, bankers are confident that more deals

will get done this year, with the U.S. election making for a

narrower IPO window in the second half.

"There are a handful of quality IPOs expected post-Easter

and we'd expect those to go well," said Martin Thorneycroft,

head of cash ECM at Morgan Stanley for Europe, the Middle East

and Africa.

Buyout firm CVC Capital Partners and Italian luxury brand

Golden Goose are among those preparing to go public as soon as

next quarter.

U.S. cybersecurity software start-up Rubrik is also planning

to launch an IPO as early as next month, sources previously told

Reuters.

Sales of publicly traded shares will continue to account for

a large chunk of activity in the coming months, with companies

and shareholders taking advantage of high stock prices, bankers

said.

So far this year they have raised $97.4 billion by selling

stakes in firms like Sensodyne-maker Haleon ( HLN ), soft drink

group Keurig Dr Pepper ( KDP ) and London Stock Exchange Group ( LDNXF )

.

One of the most awaited deals is the sale of further shares

in Saudi Arabia's oil giant Aramco, which sources said

could boost the country's finances and its aim to diversify the

economy away from oil.

European countries such Germany, Greece and Italy have also

been turning to block trades to dispose of holdings in banks and

utilities, with more expected to keep bankers busy while the IPO

market gets back on its feet.