The IPO market is heating up again due to a combination of factors including improving investor confidence, easing monetary conditions, and shifting geopolitical and regulatory landscapes. In 2025, global IPO activity has shown a notable increase in proceeds despite a relatively flat number of deals, signaling stronger demand and larger deal sizes. For example, the third quarter of 2025 saw a 19% year-over-year increase in deal volume and an 89% surge in proceeds, reflecting renewed enthusiasm among investors and companies alike[4].
One key driver is the easing of interest rates and a softening US dollar, which encourages investors to seek opportunities beyond traditional markets, particularly in Asia and Europe. This shift is supported by global exchanges enhancing their competitiveness through streamlined regulations, improved trading infrastructure, and deeper pools of investors. These improvements make it more attractive for companies to go public in markets outside the US, such as Hong Kong and European exchanges[1].
Geopolitical tensions, especially between the US and China, have also reshaped the IPO landscape. Companies are increasingly cautious about where they list, with many large Chinese firms favoring Hong Kong over US markets to avoid regulatory and political risks. The US Securities and Exchange Commission (SEC) has introduced stricter disclosure and compliance requirements for foreign private issuers, particularly those incorporated in offshore jurisdictions but operating mainly in China. At the same time, Chinese regulators have tightened controls on offshore listings, lengthening review timelines for certain types of issuers. These regulatory pressures are causing a reallocation of capital and a shift in cross-border listing patterns[1].
Sector-wise, technology, mobility, and real estate/hospitality/construction have dominated IPO issuance volumes in 2025. Technology alone accounted for $23.8 billion in issuance volume in the first three quarters, reflecting strong investor interest in innovation-driven companies. Mobility and real estate sectors also contributed significantly, showing that the IPO market is not limited to one industry but is broadening across various growth areas[3].
Another factor contributing to the IPO market’s resurgence is the growing popularity of IPO-focused exchange-traded funds (ETFs). These ETFs provide investors with niche exposure to newly public companies, which helps channel more capital into IPOs and supports market momentum. The improving outlook for IPOs in 2025 has made these ETFs more attractive, further fueling the market’s activity[2].
Despite the positive momentum, challenges remain. The sustainability of this IPO surge depends on how long geopolitical tensions and regulatory pressures persist. Large IPOs face increasing headwinds due to these factors, while smaller and mid-sized IPOs continue to be more active. The evolving regulatory environment and geopolitical landscape will likely continue to influence where and how companies choose to go public[1].
In summary, the IPO market’s recent heating up is driven by a mix of macroeconomic improvements, investor confidence, sectoral growth, regulatory shifts, and geopolitical realignments. These forces together have created a dynamic environment where companies and investors are finding new opportunities and adapting to changing global conditions.