Throughout 2019, equity capital markets will continue to be stalked, and perhaps even held hostage, by some of the same macroeconomic and geopolitical risks that conspired to derail benchmark indices and IPO activity at the end of 2018.

From the threat of a prolonged global trade war and its impact on the global economy, to the impact of rising interest rates and potential economic disruption from Brexit, equity capital markets could again be buffeted by the volatility these risks provoke. But looking beyond what could happen this year, indeed, taking a three to five year view, what is the outlook for equity capital markets and for the IPO market in particular? Moreover, to what extent is the IPO market undergoing change? What are the factors driving this and what in turn does this mean for companies going public in the future?

Our new report, The Future of Equity Capital Raising, shows how some answers have already begun to emerge. In order to assess and understand some of the underlying dynamics shaping the IPO market, we surveyed 353 senior executives from public and private companies across industries globally to capture their insight on the topic. Our research reveals several interesting findings:

  • A promising IPO pipeline for the future - 83% of 200 executives from private companies said their company is considering a partial or full IPO, with most of them (65%) stating this may happen sometime in the next three to five years.
  • Valuation and liquidity most important in deciding where to list - 66% of executives from private companies said valuation and liquidity was the most important factor in selecting which exchange to list on, followed by the strength of the local regulatory regime (55%) and peer group performance (34%). Executives from public companies take a similar view although they rank analyst and investor coverage (39%) as more important than peer group performance (22%).
  • Recognizing the tentative emergence of IPO alternatives - 65% of executives from all companies (public and private) expect to see a higher volume of direct listings (free of traditional investment bank underwriting support) in the future. In addition, almost all (94%) executives expect to see equity crowdfunding become more important to start-up companies seeking to raise capital for growth and development.
  • The rise and fall of public and private markets - 84% of executives from all companies believe some form of shift – specifically from public to private markets – is underway in where companies source equity capital from, with most of them (53%) believing a shift is only temporary. Most executives in Europe and Asia see the shift as potentially marking the beginning of a longer term trend.
  • The impact of private capital on IPOs - 84% of all executives believe that companies are waiting longer to go public compared to the past. And close to half (48%) of private companies believe the amount of private capital available is an important factor in determining when they might list, ultimately enabling them to stay private for longer before they list. Most private companies in Europe and Asia believe this.
  • Understanding the key benefits of public markets - Most executives from public and private companies believe the most important benefit of public equity markets is the efficient allocation of capital (55%), followed by enabling companies to repair balance sheets (50%), and the promotion of transparency and high corporate governance standards (44%).