Will IPOs ever come back?

Katie Martin (0:06)

Pushkin. Okay, listen up, because those shiny bankers with their fancy suits and their good hair really mean it this time. Next year is going to be a biggie for new companies hitting stock markets. Stocks are looking rosy, a whole bunch of companies and their private equity backers have been itching for their moment to launch, and those bankers are raring to go and get the deals out there. So today on the show, we're asking, firstly, really? I've heard this before, and it just never happens. We're also asking, who done it? Why have we had a slow patch in this stuff recently? And we're asking, aside from the bankers who get lovely bonuses from all this, who cares?

This is Unhedged, the markets and finance show from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist and still a baker of delicious mince pies at the FT in London. And I'm joined today by a recovering banker and friend of the FT, Craig Coben. Craig, welcome to the show.

Craig Coben (1:08)

Thank you, Katie.

Katie Martin (1:09)

I've got a little present for you.

Craig Coben (1:10)

Oh, no. What is the present?

Katie Martin (1:13)

I've got you a mince pie.

Craig Coben (1:15)

Oh, thank you. I've heard so much about these mince pies from all over the city. People have been talking about them.

Katie Martin (1:22)

You can choose to eat it now or you could choose to eat it later.

Craig Coben (1:25)

I'll nibble during the podcast.

Katie Martin (1:27)

Okay. Okay. Feel free to provide feedback. I was reliably informed you were going to wear your Fulham Football Club Christmas jumper today.

Craig Coben (1:35)

I've let down the side. I admit it.

Katie Martin (1:38)

You've failed because I've got my Liverpool Football Club Christmas jumper on and the tagline is, you'll never walk alone, which we can all agree is pretty great.

Craig Coben (1:49)

It's a good tagline. I've let down the side by not wearing my Fulham Football Club Christmas sweater. But I hope to be at the game this Sunday when we play against Southampton.

Katie Martin (2:00)

So listen, tell the class, right? You did this stuff for years, right? Doing these deals. It's pretty full on. What is involved in kind of getting these companies to market? And how much does it take out of you as a human to get these deals over the line?

Craig Coben (2:15)

To get a company in market takes a minimum of nine months and maybe longer. The company does most of the work. They have to prepare themselves internally. Their accounting systems, their finance systems, they're so much about the company has to change to be listed on a public market. For the bankers, we come in a bit later, but what we have to do is work with the lawyers to prepare the prospectus. We have to work with the company to prepare marketing materials and then we have to go out to try to encourage investors or convince investors to invest in the company. It's often a new company, new industries in some cases, new story. Most of the time, investors aren't familiar with them, so it does require a fair amount of work. I would say beginning to end for a banker is six to nine months.

Katie Martin (3:04)

Yeah, it's no joke. And this process of, so it's called an initial public offering, right? This IPO process where you get a company onto the stock market. It's like there's a lot of glitz and glamour around it as well, right? It's a kind of, it's a real focus for investors, for stock market investors globally.

Craig Coben (3:21)

It is showtime in investment banking. I know that sounds like a contradiction term, but it is probably the sexiest area of investment banking. You get listed on the stock exchange, you ring the opening bell, you have a big party. There's a lot of fanfare around it, the press write about it. I would actually say that it carries a disproportionate weight in the public imagination than probably its economic importance warrants.

Katie Martin (3:51)

Yeah, yeah, no, it's a good point.

But 2024, we've had a bit of a dearth of this kind of glitz and glamour, right? It's been pretty slow on the IPO front on companies hitting the stock market. So I got in touch with the lovely Nisha at Dealogic for some stats on this. And globally, we've had the fewest IPO deals since 2016 So everywhere we've had 1,245 IPOs. That's not a lot. Now, the US hasn't done too badly here. About 200 or so. Europe, not so good. About 100 deals, it's the worst in more than a decade, and albeit it's not a terrible deal value. UK, yeesh, tumbleweed, 13 deals. That's the slowest year by far for a really long time. Back in the day, not even that long ago, you get somewhere between 65 and 100 IPOs from the UK a year. So like, what's going on, right? Because markets in and of themselves have been doing pretty well. Just the flow of new blood to the markets has really dried up.