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IPOs slow amid valuation uncertainty

IPOs slow amid valuation uncertainty

05/18/2025
Felipe Moraes
IPOs slow amid valuation uncertainty

As we reach the midpoint of 2025, the US initial public offering (IPO) market faces a notable slowdown. Through mid-June, only 84 companies have gone public, down sharply from 150 in the same period of 2024 and 109 in 2023. Total proceeds have plunged to just $13 billion, marking the weakest half-year haul since 2022 and a far cry from the record-setting 2021 IPO boom that raised $140 billion.

This deceleration reflects a complex mix of factors, from heightened scrutiny of business models to geopolitical uncertainty. Companies and investors alike are grappling with the question: when will confidence return?

Shifting IPO Landscape

In the first quarter of 2025, global IPO activity painted a mixed picture. Deal count surged 76% year-over-year to 79 offerings, yet proceeds climbed only 28% to $11.4 billion. Traditional IPOs commanded 73% of US listings (58 deals), while SPACs accounted for 24% (19 deals), signaling a modest resurgence of conventional routes.

Average proceeds per traditional IPO reached $146.3 million, reflecting issuers’ efforts to find realistic pricing amid cautious demand. Nevertheless, the aggregate performance remains subdued, underscoring a hesitancy to chase valuations in a market where blockbuster names are scarce.

Drivers of Slowdown

The pullback in IPO activity stems from several interrelated causes.

  • Valuation uncertainty: Investors resist persistent inflation and regulatory shifts, viewing many proposed listings as overly bullish.
  • Lack of must-have names: Absent the likes of Nvidia or Meta, cohorts fail to generate widespread enthusiasm.
  • Macroeconomic headwinds: Concerns over interest rates, tariff policies, and an upcoming US election weigh on risk appetite.
  • Geopolitical and supply chain risks: Tensions with China and evolving trade barriers sow further hesitation.

Many companies have deferred filing deadlines, opting to recalibrate expectations and await clearer signals. Deal teams cite the need for disciplined pricing and risk assessment over aggressive premium-chasing strategies.

Sector and Regional Highlights

Certain industries have fared better despite the broader slump. Life sciences companies, when armed with a clear near-term path to profitability, continue to attract investor interest. Technology, manufacturing, and financial services also lead in deal flow, reflecting ongoing demand for innovation and efficiency plays.

On the global stage, pockets of activity persist in major financial hubs:

  • Hong Kong: Mixue, a Chinese beverage brand, raised $444 million.
  • Amsterdam: Ferrari Group listed at an $818 million market capitalization.
  • Oman: Asyad Shipping secured $332.8 million.
  • US Energy: Venture Global’s LNG export unit raised $1.75 billion.

Despite these marquee deals, average first-day returns have been muted, especially in healthcare, where early 2025 offerings often opened flat or slightly negative.

Looking Ahead: Market Outlook

Experts project that the 2025 IPO market may finish slightly above average, with total capital raised reaching $45–50 billion and up to 160 US debuts by year-end. Filing activity has ticked up since April, hinting at a tentative recovery in issuer confidence.

Investor focus remains sharply on fundamentals. Companies that can demonstrate robust cash flows and a sustainable earnings trajectory are poised to succeed. Conversely, those lacking near-term profitability may face further delays or price compression.

Preparation and Strategic Readiness

Issuers are using the current slowdown as an opportunity to strengthen their foundations. During this “downtime,” management teams are enhancing governance frameworks, shoring up risk management practices, and beefing up cybersecurity defenses.

Key preparations include:

  • Upgrading financial reporting to meet stringent public company standards.
  • Securing comprehensive directors’ and officers’ insurance coverage.
  • Crafting clear communication strategies that highlight sustainable business models.

These initiatives aim to instill confidence among skeptical investors and ensure readiness to accelerate when market dynamics shift.

Ultimately, the 2025 IPO environment illustrates the evolving interplay between valuation discipline and capital market access. While uncertainty remains, disciplined issuers with compelling value propositions and robust governance stand ready to seize opportunities as they arise.

For companies navigating this landscape, the path forward lies in balancing patience with proactive preparation—building stronger businesses today to unlock greater success in tomorrow’s markets.

Felipe Moraes

About the Author: Felipe Moraes

Felipe Moraes