Two weak years for IPOs - now the market is gearing up for 2024
In 2023, the IPO market in Sweden remained weak. Only one company, Rusta, was listed on Nasdaq's main list, compared with three companies in 2022 and 25 in 2021, which was close to a record year. Looking at all lists, more than 100 new companies were listed in Sweden in 2021, which was the largest number in more than two decades;
Low activity also in the US
In other markets, such as the US, the number of IPOs has fallen sharply over the past two years due to concerns about inflation and interest rate hikes. Despite this, there is speculation that the IPO market will pick up again in 2024, something that the leading Nordic accounting firms are also hoping for.
A further contributing factor is the uncertain stock market climate that has prevailed over the past two years. Many companies want to go public when investors are favourably disposed towards the stock market. However, the tech sector has bucked this trend. Following the successful listing of chipmaker Arm on Nasdaq New York in the summer of 2023, more US tech companies are looking like strong IPO candidates. On Wall Street, there are whispers about Stripe, Databricks and Reddit with valuations of around USD 50, 40 and 15 billion respectively. There is also speculation on the Stockholm Stock Exchange about major listings next year. At the end of October, for example, Financial Times reported that Northvolt is planning an IPO in 2024 at a valuation of around $20 billion.
More opportunities but also new requirements
Regardless of the time and market situation, there are always several things to consider in an IPO. An IPO creates opportunities to raise new capital, enables acquisitions with the company's own shares as payment, and increases awareness of the company. All three reasons sound reasonable to potential investors, but an IPO also creates opportunities for existing owners to sell their holdings, or to "make an exit", as it is called. Therefore, an important part of the communication around an IPO is to explain the reasons behind the decision.
An IPO is also very resource intensive, both in terms of time and money, which means that companies need to engage several external consultants before, during and after the listing. Depending on which list a company intends to list on, several requirements must be met. These may include an IPO readiness assessment (also known as a stock exchange prevision), financial reporting according to IFRS, sustainability reporting according to upcoming legislation in ESRS, financial analyses, preparation of several policies, review of corporate governance and preparation of a prospectus, which is the material available to the market prior to listing. On Nasdaq Stockholm, the company must also undergo an independent review if it is appropriate to list the company. The review is to be presented to Nasdaq and is carried out by a third party, usually an auditing firm that has not been involved in either the stock exchange audit or the company's regular auditing work.
IR becomes a new part of daily work
When a company goes public, the demand for transparency increases. This in turn places additional demands on how the company handles its external communication. Investor Relations (IR) becomes a new part of the daily work and includes, among other things:
- Preparing, compiling and presenting quarterly reports
- Preparing the annual report
- Writing and publishing press releases
- Keeping the website updated and relevant
- Environmental analysis and media monitoring
- Manage any contacts with the business media
- Answer questions from shareholders
- Organising capital market days and other events
What can we help with?
AVA Corporate Communications is a modern communications agency with experienced consultants specialising in financial communications and investor relations for Nasdaq listed companies. A key recommendation for anyone considering an IPO is to prioritise your IR website. For a company about to be listed, this represents a relatively small one-off investment that has a significant impact over time. A well-developed IR website helps build trust and ensures access to relevant information for investors, which is an important factor for success in a listed environment. Having all the necessary elements in place at the time of listing is therefore a major advantage, and after listing the focus is mainly on maintenance, content updates and further development.
