Will Private Equity Fuel a Big Year for IPOs?

The IPO market has one X factor this year: private equity.

As the New Year rolls in, Wall Street is preparing for a slew of listing announcements from private equity-backed firms, according to a Financial Times report this weekend.

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Last year marked a turnaround year for the IPO market, which has been stymied by the post-pandemic spike in interest rates. The 183 public listings in the US last year marked a 44% year-over-year increase from 2023, while the total raised reached around $32 billion, or nearly 60% above 2023 levels, according to Dealogic. But that still lags the norm of roughly $38 billion per year raised by IPOs in the years leading up to the pandemic spike. Bankers told the FT they’re hoping the IPO market will reach par once again this year. And there’s hope that last year’s successes will spur an appetite for more listings: Of the 10 largest IPOs last year, nine rang in 2025 with share prices above their initial listing prices. Meanwhile, the spectre of more interest rate cuts — even if at a clip slower than originally anticipated — and a more relaxed regulatory environment make the IPO market look all the frothier.

Enter private equity. The post-pandemic dealmaking drought has the industry warding off frustrated backers who have been waiting – and waiting – to see a return on investment. All of which means PE firms might finally have the perfect exit ramp to cash out on maturing portfolio companies and cash in on resurgent demand for IPOs:

• The dominoes are already starting to fall. Medical equipment-maker Medline — owned by buyout firms Blackstone, Carlyle and Hellman & Friedman — filed for an IPO just before Christmas, while the PE-backed software firm Genesys has been planning its IPO since October.
• It’s a continuation of a trend from last year. According to a recent report from Ernst & Young, PE firms were backing 12 of the 20 “mega IPOs” — way up from just two the year prior.

“With an [economic] backdrop that is a bit more certain, more of a pro-business bent to regulatory policy and the Fed [cutting interest rates], we should be busier for sure,” Eddie Molloy, global co-head of equity capital markets at Morgan Stanley, told the FT. “Large [PE-backed] IPOs will be the most important theme.”

Dry January: Bringing maturing companies to the public market isn’t the only New Year’s resolution for many large PE firms. The industry is also sitting on an absolute mountain of dry powder — or capital that’s been raised but not yet invested. According to figures from data provider Preqin seen by The Wall Street Journal, PE firms have more than $500 billion of dry powder from funds raised in 2020 and 2021 alone — with most such funds having required investment periods of four to six years. Take it from us humble newsletter writers: Sometimes a deadline is the ultimate motivator.