Goldman Sachs global IPO market positive turn 2023 2024
October 5, 2023
Goldman Sachs anticipates global IPO market ready for positive turn

A new report from international multinational investment bank and financial services company Goldman Sachs has tipped that the global initial public offering (IPO) market is about to have an injection of positive sentiment.

In a webcast led by David Ludwig, global head of Equity Capital Markets in Goldman Sachs’ Global Banking & Markets business, it was noted that signs of life in the global IPO market is spurring investor optimism there will be an increase in the number of companies which will decide to go public this year.

However, he did warn that a broader recovery in the market is more likely to kick off in 2024.

“I would say we’re having a soft opening of the IPO market,” he said on Goldman Sachs Exchanges.

“We’re not at the time in the market where we’re going to see that broad-based, widespread opening that any company can get public under attractive terms.”

Mr Ludwig said it is not only companies and sellers taking a more active and broader look at the markets, but potential shareholders are also engaging in more active discussions with companies that are likely to go public.

“They’re all actively considering, ‘If I’m going to be adding risk to my portfolio, what are the types of companies and assets I want to put in the portfolio right now,’” he added.

“Those two pieces allow us to get to better equilibrium to see transactions occur on a more consistent basis.”

Brighter future for global markets

The Goldman Sachs equity market specialist said global markets are in a good spot to see the markets continue to open a little bit more broadly over the next couple of months and quarters.

“I think it’s clear from the last handful of transactions that high quality companies have very efficient access to the capital markets, we’re seeing better valuations and part of that’s the overall market, we’re seeing high quality shareholders come into these transactions and support companies in the aftermarket,” he said.

“I think that’s very powerful to me, as I look at it, we’ve never really expected the market to be fast opening over the end of 2023, that’s more likely to happen in 2024.”

“But overall, I’m actually very positive about how these first handful of IPOs went, especially in a market that’s become more volatile over the last handful of weeks.”

Investor confidence on the rise

Mr Ludwig said he believed investor confidence has definitely been improving over the course of the year, after investors had possibly positioned themselves for a recession at the beginning of this year.

“I think, as you got more confident in a soft landing, which has been a Goldman Sachs call for some period of time, you saw significantly more risk getting added to their portfolios, especially in and around some of the growth sectors.”

“I think that’s been very positive for the IPO business, given a large portion of the IPOs happen to be in sectors that need capital for growth. What’s happened over the course of the last few weeks is that there may have been over positioning.”

Balancing risks amid economic indicators

“And as you kind of see inflation, running hard concerns about where rates are going, what the Fed is going to do. Some of the risks have been pulled back off. But we still have been able to get these IPOs done because there are enough investors that want to add high quality companies, their portfolios, that when they see high quality when it comes to the public markets, it really wants to engage.”

Mr Ludwig noted that the market continues to stabilise, with volatility subsiding and pricing dynamics on deals, whether it be private or public, beginning to improve with better shareholders.

“I think a lot of companies, a lot of sellers are definitely thinking about the capital markets more urgently and more broadly right now. And I think that’s constructive to us. I think the other piece that’s very constructive is that we’re seeing shareholders or potential shareholders really engaging with companies more aggressively and more actively, whether they be near term issuing candidates, or longer-term candidates, they just want to start getting to know right now, because I think they’re all actively considering.”

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