IPOs down in quantity but are up in value this year

The total number of Initial Public Offering (IPO) deals was down 7pc in the first quarter of this year, as private companies continued to steer clear of public markets.

The 287 deals globally did raise a total of $23.7bn according to the latest EY trends report, 7pc up on the same period last year.

Fergal McAleavey, a corporate finance partner at EY Ireland, noted IPO activity here remains “subdued”, although the hope is that improvements in global market conditions, cuts in interest rates, and a number of recent high-profile flotations – such as Reddit’s – will spur activity.

“It’s crucial to note, however, that today’s thriving companies have a much wider range of options and greater access to private funding than in previous years,” Mr McAleavey said. “This abundance of private equity capital, often referred to as ‘dry powder,’ is so substantial that an IPO, while still a viable route for businesses, is no longer the exclusive pinnacle of success it once was.”

Donegal entrepreneur Cathal Friel recently completed his fifth flotation on London’s Alternative Investment Market, raising £6.4m (€7.5m) before expenses from institutional investors for European Green Transition.

His enthusiasm for small-cap IPOs is not shared by Dublin’s two stockbroking firms, which is why he goes overseas. Earlier this year Mr Friel told the Irish Independent: “For 15 years we’ve tried to encourage Davy and Goodbody to support our public companies, and they say, ‘No way, too small.’ When we go to London, there’s an open door to all the brokers.”

Asked about the dearth of IPOs in Ireland, Mr McAleavey said that when the likes of Kerry Group was scaling up 20 years ago, it was quite difficult to raise private capital, unlike now.

“Public capital in the market was the way to get equity to grow and scale your business. Nowadays there is so much venture capital that there is a wider choice for companies,” he said. “I guess also there are probably not as many institutional investors as there would have been 20 or 30 years ago. Larger global organisations, whether based in New York or London, set the agenda for where the investment goes.”

According to the EY global trends report, the IPO markets in theAmericasandEMEIA(Europe, Middle East, India and Africa) had a bright start to the year, but the Asia-Pacific region dragged down the average.

The current share prices of most newly issued IPOs exceeded their offer prices, “potentially reflecting growing confidence among issuers and investors”, the report said.