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Revival of the IPO Market: A Surge in Activity and Future Prospects

Key Highlights

In a notable rebound, companies in the United States conducted initial public offerings (IPOs) that generated $39.32 billion, surpassing the figures from 2022 and 2023. While this amount is below the record high of 2021, market analysts anticipate a significant increase in IPO activity in 2025, especially with the expected easing of regulations under the administration of President-elect Donald Trump and the Federal Reserve’s decision to lower interest rates. July saw the largest IPO of 2024, with Lineage, renowned as the foremost operator of cold-storage facilities, raising $5.10 billion.

This year is shaping up as the most active for IPOs in the United States since the peak experienced in 2021. Future prospects seem promising.

As of late December, U.S. companies going public have raised upwards of $41 billion, per Dealogic data, which exceeds the approximate $24 billion garnered in 2023 and $22 billion in 2022.

Nonetheless, this year’s total represents only a fraction of the record $316.6 billion raised in 2021, during which many companies took advantage of favorable conditions, including low interest rates, to access capital markets. Investors are now showing optimism for the IPO landscape in the coming year.

The IPO Market’s Chilling Phase Post-2021

Following the peak in 2021, the IPO market experienced a stark decline, marked by the diminishing allure of special purpose acquisition companies (SPACs) and a series of disappointing IPO performances.

A telling example is Rivian Automotive (RIVN), which has seen its market value plummet by over 75% since its public debut in early 2022. On average, U.S. IPOs experienced a 16% drop on their first trading day in 2022, according to Dealogic.

The Federal Reserve initiated a series of interest rate hikes starting in March 2022 to combat rising inflation, leading to the fed funds rate reaching a peak not seen in over 20 years. This shift effectively stalled numerous companies’ plans to go public. Higher interest rates make capital borrowing more costly for new firms and intensify competition for investors’ capital.

Anticipating a 2025 IPO Surge with Rate Cuts

Two primary factors fuel investor optimism for a revival in IPO activity: The Federal Reserve has been implementing interest rate reductions since September as inflation shows signs of stabilization, and the anticipated pro-business policies under President-elect Donald Trump’s administration, which are likely to include tax cuts and regulatory relief.

“Deregulation will empower earlier-stage companies, facilitating their growth and market penetration,” affirmed Ross Carmel, a partner at the IPO-centric law firm Sichenzia Ross Ference Carmel.

Upcoming IPOs from firms such as AI chip manufacturer Cerebras Systems and Swedish payment giant Klarna are being closely monitored as potential indicators of market appetite for new listings.

Carmel noted, “If these offerings perform well after launching, it could pave the way for other established companies to pursue IPOs in 2025.” He also mentioned that firms in the cryptocurrency sector might be similarly poised to attract investor interest with a new administration more favorable to digital assets.

It is crucial, however, to note that private markets have thrived this year, providing numerous attractive alternatives for investment. Notable examples include Elon Musk’s SpaceX and the AI powerhouse OpenAI, both of which continue to attract substantial funding outside of public markets.

A Noteworthy Year for Some IPOs, But Not All Top Actors

This year saw remarkable individual successes among IPOs, yet not all were able to secure positions among the top five by funds raised. Companies like Reddit (RDDT), which recently reached record stock prices, are not counted among the top performers.

Top Five Successful IPOs of the Year

1. Lineage (LINE)

Leading the pack, Lineage, the largest cold-storage warehouse operator globally, achieved an impressive $5.10 billion through its IPO in July. This marked the most significant stock offering since British chipmaker Arm Holdings raised $5.23 billion in September 2023 and represented the largest IPO from an American company since Rivian’s $13.72 billion offering in November 2021.

2. Viking Holdings (VIK)

The cruise line operator raised $1.77 billion during its IPO in May.

3. StandardAero (SARO)

The aviation maintenance firm, backed by the Carlyle Group, went public in October, securing $1.66 billion.

4. Amer Sports (AS)

The Finnish sporting goods manufacturer, known for brands like Wilson, generated $1.57 billion from its IPO in January.

5. UL Solutions (ULS)

The applied safety science company raised $1.09 billion when it went public in April.

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