Key facts
- Law firms are adjusting capital markets training in response to market volatility and regulatory shifts affecting IPOs.
- Recent US IPOs have seen success, with five large deals raising over $5 billion after a ceasefire in Iran.
- The UK has implemented significant regulatory changes to its listing regime to attract and retain companies.
- UK pension funds are being encouraged to increase their allocation to domestic equities and unlisted companies.
- Geopolitical events, such as hostilities in the Strait of Hormuz, continue to impact the timing and execution of IPOs.
Law firms are adapting their capital markets training and strategies in response to a volatile global market influenced by geopolitical events and regulatory reforms. The recent surge in US IPOs, following a period of dormancy due to hostilities in Iran, highlights the stop-start nature of the market. Five large deals raised over $5 billion last week, with four more expected to price soon, signaling a potential for record volumes if market calm persists.
However, renewed hostilities in the Strait of Hormuz underscore the sensitivity of capital markets to international headlines. Lawyers like Bob Hayward of Kirkland & Ellis emphasize the need for companies to be prepared to act quickly when market windows open. The success of recent IPOs, such as military drone manufacturer Aevex, which saw a 35% first-day gain after raising $320 million, is crucial for maintaining momentum.
In parallel, the UK is implementing significant reforms to boost its capital markets. The Financial Conduct Authority (FCA) has made substantial changes to the listing regime, removing barriers that deterred companies, particularly in the high-growth tech and fintech sectors. Further regulatory adjustments are planned for 2025, including changes to the prospectus regime to facilitate quicker and cheaper secondary capital raising.
Efforts are also underway to unlock more capital from UK pension funds, which have historically been risk-averse and allocated less to domestic equities. Initiatives like the 'Mansion House Compact' aim to increase investment in unlisted equities, and plans to consolidate fragmented pension schemes into larger 'megafunds' are expected to unlock billions for British infrastructure and high-growth companies.
Despite the day-to-day market fluctuations, lawyers at major firms continue to advise companies on longer-term strategies such as acquisitions and private capital raising, which are less impacted by immediate headlines. The growing number of 'unicorns' – private companies valued over $1 billion – fuels optimism for a strong pipeline of future IPOs, with some anticipating unprecedented demand in the coming years.