IPO Activity Set to Surge in 2025 Amid Market Recovery

The global market for initial public offerings (IPOs) is poised for a significant resurgence in 2025, following a period of relative inactivity due to market volatility and U.S. tariff policies. Investment banks, led by firms such as Morgan Stanley, anticipate a robust environment for IPOs as investor sentiment improves and economic conditions stabilize.

The IPO market experienced a substantial slowdown in 2022 and 2023 as rising interest rates and inflation dampened company valuations, causing many firms to postpone their public offerings. However, recent reports indicate that the first half of 2025 has seen a year-on-year increase of 7% in equity capital market issuances, with a total of 499 deals completed, which includes 168 IPOs, 292 follow-ons, and 39 convertible bond offerings (S&P Global, July 2025).

According to Arnaud Blanchard, Global Co-Head of Equity Capital Markets at Morgan Stanley, the successful trading of newly issued IPOs has created a more favorable backdrop for subsequent offerings. "Our leadership in equity sales and trading provides us with unique insights into investor sentiment, which has enabled us to guide our clients effectively through this recovery phase," Blanchard stated during a recent press briefing.

Eddie Molloy, also a Global Co-Head of Equity Capital Markets at Morgan Stanley, emphasized the importance of adaptability during volatile market conditions. He noted, "We have been proactive in helping companies navigate their IPO strategies, setting us up for what we hope will be an exciting second half of 2025 and an even more active 2026."

The renewed interest in IPOs is further driven by the backlog of private equity and venture capital investments that need to be monetized. As of July 2024, there was approximately $2.6 trillion in uncommitted capital among private equity firms (Pitchbook, September 2024). Molloy highlighted that a significant number of aging private-equity-owned assets are expected to go public in the coming years, contributing to the projected increase in IPO activity.

Experts predict that the upcoming wave of IPOs will predominantly feature established companies, particularly in the technology and healthcare sectors, although a broader mix of industries is anticipated. Martin Thorneycroft, another Global Co-Head at Morgan Stanley, observed that geographic diversity will also be a hallmark of future IPOs, with increased activity expected in Europe and Asia as well. "While U.S. IPOs have received a lot of media attention, Asia has shown a remarkable uptick in IPO activity in early 2025, and we foresee this trend continuing," Thorneycroft noted.

In addition to IPOs, the demand for follow-on offerings and convertible bonds is expected to remain strong as companies seek flexible funding options in a high-interest-rate environment. Molloy cited that U.S. companies raised over $20 billion through follow-ons in September 2024 alone, marking a significant recovery in issuance (Dealogic, September 2024).

As the IPO market continues to gain momentum, industry participants remain cautious about potential market volatility, which could influence deal processes and investor sentiment. Nevertheless, the overall outlook for IPOs in 2025 is one of optimism, with investment banks poised to play a vital role in guiding companies through this resurgence in equity financing.

As we approach the latter half of 2025, stakeholders across sectors and geographies will be closely monitoring the evolving market dynamics that could reshape the landscape of public equity financing in the years to come.