Anticipation and Uncertainty in the Global IPO Market

After a challenging year in 2023, the global initial public offering (IPO) market regained momentum in 2024, generating a deal value of over $126 billion from 1,340 IPOs. However, the market has not yet rebounded to its 2021 peak, when low interest rates and high markets facilitated a staggering $606.68 billion from 3,136 IPOs.

According to experts in the field, the IPO market is expected to improve on last year, but is unlikely to return to the «average» state observed in the past. Akhil Chainwala, senior investment director of Swedish investment company Kinnevik, posits that we are currently in an IPO market that «values scale,» with investors gravitating towards larger, proven businesses that promise predictable and sustainable growth.

In the travel tech sector, there is cautious optimism about potential IPOs. However, uncertainties persist, mainly due to the lack of clear market signals about the underwriting for exits in terms of revenue multiples, causing some nervousness among investors. As a result, valuations have, to an extent, become detached from reality.

Private equity has been driving much of the investment activity recently, with large growth and late-stage deals carried out by tier-one private equity firms. These firms have mostly replaced historically small-cap IPOs, contributing to the current mixed IPO picture.

Despite the uncertainty, there are promising signs. In 2024, India emerged as the most active IPO market globally. The United States, meanwhile, saw a 75% year-on-year increase in IPO proceeds, reaching $41.36 billion. Asian markets, though volatile, are showing a healthy outlook, with a long queue of new issuances expected in Hong Kong.

Some significant IPOs are anticipated in the travel tech sector in the coming year. One such potential debut could be OYO, the SoftBank-backed hotel group, which had previously pulled a planned IPO in May 2024. However, the volatile situation means some companies have delayed their IPO plans.

In Europe, IPO proceeds doubled to $16.63 billion last year, indicating a positive trend. HBX Group, the parent of lodging marketplace Hotelbeds, made a successful debut in the Spanish markets, raising €748 million and valuing the company at €2.5 billion.

Looking ahead, the wave of artificial intelligence (AI)-based travel startups could feed the coming IPO boom. However, DeepSeek’s entry into the market has caused a shock, prompting investors and operators to reassess the value of foundational models.

In summary, while the global IPO market remains uncertain, there is cautious optimism about the future, particularly in the travel tech sector. The potential for growth and the possibility of the IPO window reopening offer cause for hope in the face of current challenges.

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