#Japan #Tokyo #Q3 2025 #IPO Trends #EY Global IPO

Global IPO Market Recovery: Q3 2025 Overview

According to a recent report by EY, the global IPO market is witnessing a significant rebound in the third quarter of 2025, fueled by renewed investor confidence and a favorable economic climate. As major stock indices reach record highs, the recovery marks a pivotal moment for companies looking to go public. The increase in IPO activity is particularly notable in regions such as the United States, India, and mainland China, with a surge in transactions reflecting a robust market environment.

Key Highlights of Q3 2025 IPO Activity

The third quarter of 2025 saw an impressive 19% rise in the number of global IPOs compared to the same period last year, with total funds raised nearly doubling, enhancing the overall market sentiment. The resurgence was primarily driven by the United States, where strong market conditions and favorable IPO pricing boosted investor participation. Particularly striking was India's performance, where IPO transactions tripled, and the amount raised quadrupled compared to the second quarter, signaling a vibrant domestic market.

In addition, mainland China and the Middle East displayed resilience, while Europe began to exhibit signs of recovery, attributed to regulatory reforms and improvements in macroeconomic conditions.

Evolving Regulatory Frameworks

In response to the growing competitiveness of global exchanges, significant reforms have been initiated to streamline listing procedures and attract innovative companies. Regulatory bodies are also enhancing safety measures to strike a balance between investor protection and fostering innovation. This dual approach aims to expedite fundraising efforts while maintaining market stability, crucial for restoring trust in the IPO process.

Shifts in Private Equity-Backed IPOs

Private equity firms are reevaluating IPOs as an exit strategy amidst ongoing reliance on mergers and acquisitions along with secondary sales. In the first three quarters of 2025, the number of IPOs backed by private equity rose more than twofold year-over-year, representing a regained trust among investors. This trend is particularly pronounced in regions such as the United States, mainland China, and Scandinavia. Strong performance post-IPO, especially in sectors that have embraced AI and digital transformation, supports the growing inclination of private equity firms towards public listings.

Market Sentiment and Outlook

The confluence of financial easing, robust corporate earnings, favorable IPO returns, and low market volatility has bolstered investor confidence, greatly stimulating IPO activity. Sectors adapting to AI and digital transformation have particularly thrived during this period.

However, persistent challenges such as tariff issues and political instability continue to cast a shadow over market confidence. Investors are increasingly seeking sustainable business models capable of weathering market fluctuations.

Firms planning to go public must prioritize strategic diversification and adaptability to external circumstances. As the world transitions towards addressing climate change and navigating geopolitical complexities, potential IPO candidates need to construct equity narratives that align with macro trends and manage external risks effectively, ensuring resilient strategies for the future.

Insights from EY

Masayoshi Zenpo, Deputy Director of the EY Growth Support Center, shared insights regarding Japan's IPO landscape. He noted a decline in the number of IPOs from 54 to 37 year-on-year, highlighting a 31% decrease. This decline followed recent revisions to listing maintenance standards on the Tokyo Stock Exchange's Growth Market, resulting in fewer IPOs in that sector.

Moreover, smaller IPOs with market valuations below 5 billion yen saw significant reductions, leading startup companies to postpone their IPOs until they achieve certain business valuations. If trends continue, Japan's total IPO count for 2025 may remain at around 60, falling short of last year's total of 86.

Conclusion

The global IPO market is experiencing a transformative phase in Q3 2025, characterized by a strong recovery and shifting investor psychology. It is crucial for companies considering an IPO to remain proactive in navigating the evolving landscape, ensuring they align with prevailing trends, manage risks, and articulate compelling business narratives that resonate with modern stakeholders. As highlighted by EY’s findings and expert opinions, the journey ahead requires not only resilience but also strategic foresight in the face of ongoing uncertainties and transformations in the financial landscape.