Welcome to the third edition of the Deloitte Ireland Equity Capital Markets (“ECM”) winter update – 2023 - 2024. We are delighted to begin this update featuring our conversations with Goodbody, Davy and Deutsche Numis, sharing their views on the current state of the capital markets, the prospects ahead and the priorities for the Irish market.

Our update contains an analysis of the performance trends in ECM during 2023. We analyse the different macroeconomic and geopolitical factors that informed IPO issuance levels in the European (and Irish) markets. In addition, we have also provided a summary of the key findings from our most recent Irish CFO Survey and a cheat sheet of key points to consider when choosing between listing locations for your business.

Key points:

• The effects of the continuing macro-economic and geo-political uncertainty translated into a general lack of IPO activity globally, notwithstanding a general rise in equity prices over the period.
• In many ways, the lack of IPOs seems disconnected to the underlying economic fundamentals, specifically the increasing cost of debt which is enhancing the attractiveness of equity as part of companies capital structuring, as well as forcing Private Equity to consider valuations, hold periods and exit strategies.
• Another consideration is the recalibration of sellers’ pricing expectations following the valuations bubble which emerged during the Covid-19 Pandemic. This has been reflected in both the after-market performance of companies which listed during 2020-2021, as well as the subsequent funding rounds of private businesses. As sellers reconcile their expectations to this new pricing environment, it should unlock further listings which may have been awaiting the right market and pricing opportunities. 
• In terms of how this will translate into IPO activity, whilst we expect to see improved IPO markets in 2024 (with the Reddit IPO as the vanguard), we anticipate that IPO markets will substantially re-open in 2025 as interest rate regimes normalise and the market will adjust to the ‘new normal’, in time for the opening of the Q1 25 IPO window. We recommend that businesses/investors considering IPO as a potential exit route also consider initiating readiness activities now to ensure they are well positioned when markets open for business.
• We are also pleased to remind founders, shareholders and management teams that our IPO Scanner is a free and easy-to-use tool enabling you to assess the readiness of your company for both the IPO process and life as a listed company, and the earlier that a company starts preparing for the IPO journey, the better. Our IPO Scanner now features a newly added ESG module, allowing you to assess your company's readiness for an IPO in light of ESG considerations. 

We hope you enjoy reading this third edition of our Irish ECM Update.