IPO Insights Q3 2024

• 44 US IPOs raised $7.9 billion in the quarter, with volume remaining steady but total proceeds falling 10.8 percent as compared to the previous quarter.
• Lineage Inc. brought the biggest deal of the year, raising $4.4 billion.
• Healthcare and biopharma brought more than 30 percent of the listings and represented half of the top ten issuances in the quarter.
• Continued tailwinds for manufacturers helped the sector record a 7.6 percent return on the back of nine listings.

Healthcare and life sciences stocks dominated the new listings for the quarter, representing 14 of the 44 IPOs. Concentra Group Holdings, a provider of occupational health services, raised $529 million and Bicara Therapeutics, a clinical-stage biopharmaceutical company, raised $315 million. And half of the biggest deals (by value) in the quarter were healthcare and life sciences offers. Market appetite was uneven, however, leaving the group down 9.4 percent by the end of the quarter.

The best returns of the quarter were chalked up by small to medium manufacturers. The IM sector brought just nine listings to market (their lowest volume of 2024) that, combined, raised less than $100 million. But the group delivered a 7.6 return on the quarter, led by Primega Group Holdings Limited (a Hong-Kong based construction services company), which delivered a 180 percent return.

Other big raises included OneStream, an enterprise platform provider, which raised $490 million and enjoyed a 30 percent return on the quarter, and BKC Corporation, a US shale gas producer, which raised $270 million.

Private Equity (PE) exit volume and values both picked up in the quarter, with volume up nearly 20 percent and values up more than 10 percent. However, both the volume and value share of corporate acquisitions declined in the current quarter on the back of a slight revival in the IPO market and heightened PE deal activity, leading to an uptick in sponsor acquisitions.

Venture Capital (VC) activity remained sluggish, however, with volume and values down year-over-year and quarter-over-quarter. One particular area of growth in VC exit activity has been buyout exits, which are expected to continue to grow as a proportion of exit values as PE firms pick up assets as part of their add-on strategies to strengthen platform companies for future economic growth.

In September, the Fed cut the federal fund rate by 50 basis points and signaled that further cuts were likely (the Fed Dot Plot suggests another 50 basis points will be cut before the end of 2024). Yet this cycle has been somewhat peculiar: even with historically high rates, markets have enjoyed robust growth (the S&P 500 gained 25 percent in 2023, and the Russell 2000 gained 16 percent).

High interest rates have had a long-term impact on issuances, however. Total IPO volume is still just around a quarter of what it was in the highs of 2021. In different times, September’s rate cut would have brought a flurry of IPOs to the market. As it was, election uncertainty and geopolitical tensions kept the door shut.

The signs all align for a great start to 2025, therefore. Assuming no new or worsening geopolitical issues test the fabric of global markets, the combination of continued rate cuts and a robust pipeline of IPO-ready companies should make for an active first quarter of 2025.

Exploring dual-track strategies

Facing high levels of market uncertainty and recognizing that markets are now likely shut for the next few months, a growing number of private companies are pursuing dual-track strategies where they prepare for both an IPO and a sale at the same time.

For those IPO-ready companies waiting for the markets to open, a dual-track approach helps preserve optionality, thereby increasing flexibility and reducing the risk of continued market weakness. For those exploring a sale option, preparing for an IPO can help boost valuations by adding a sense of competition to the mix.

Expect to see more dual-track approaches over the next few months.

Understanding the key trends and investor expectations is critical to preparing for an IPO. Investment narratives matter. They cut through the deluge of data and analysis, and help companies sift real windows of opportunity from market noise. And the most compelling deal stories come from insights about a company’s unique mix of valuation drivers. Sector. Markets. Customers. Portfolio mix. Capital structure.

At KPMG, our professionals offer a range of services specifically designed to help privately owned companies—venture-backed or otherwise—navigate each stage of the IPO journey. We help entrepreneurial ventures simplify the complex challenges of going public, while helping ensure they meet their diverse regulatory, compliance, and reporting requirements. 

Working with KPMG, you gain access to trusted advisers who share your entrepreneurial mindset. And we can help you understand and improve the factors that drive maximum deal value for your offering.

Source: (for all market commentary and data cited on this page): KPMG US Equity Capital Markets Update Q3 2024 Report, KPMG LLP, October 2024