While the overall global IPO market has been subdued, the U.S. market saw about $30 billion of issuance to date, some one-and-a-half times the amount of full year 2023, Michal Katz, Head of Investment & Corporate Banking at Mizuho Americas, told a group of investors during the panel discussion “When Will the IPO Outlook Turn Positive?” at the Future Investment Initiative (FII), which took place at the King Abdulaziz International Conference Center in Riyadh, Saudi Arabia on October 29, 2024.
Michal joined a group of experts including Bonnie Y. Chan, CEO, Hong Kong Exchanges & Clearing Limited, Michael Klein, Managing Partner, M Klein & Company and Alexandra Soto, COO, Lazard, for the discussion, moderated by Edith Yeung, General Partner, Race Capital. Panelists described a changing ecosystem and high barriers to entry for IPOs. Over the last three decades, the number of publicly traded companies has halved from roughly 8,000 to 4,000, Michal told audience members. One way to replenish this lost volume is to focus on more non-traditional paths to monetization such a spins, splits and IPO carve outs which allow companies to shed noncore assets and maximize value, along with regular way debut of venture-backed startups and PE portfolio companies.
Regulations and geopolitical concerns have also impacted the IPO market and drawn concern, the panelists said. But sometimes it’s as simple as investor limitations that weigh on IPO demand. Some investment management strategies require a market capitalization threshold, which small firms cannot meet, Michal said.
Dubbed “Davos in the Desert” the conference drew global financial luminaries and highlighted recent investments in the Middle East nation. This week, Mizuho said it will establish a regional headquarters in King Abdullah Financial District Neighborhood in Riyadh, Saudi Arabia, and will launch an exchange-traded fund with the Saudi Public Investment Fund that invests in Saudi stocks.
Watch the panel discussion below: