If 19th century philosopher Friedrich Nietzsche was surveying modern finance, he might well say “IPOs are dead. IPOs remain dead. And we have killed them!” So far in 2023 there have been 60 IPOs in the high-margin US market raising US$11.6bn, according to LSEG data. That is roughly a quarter of the average raised annually in the past decade – from well under half the average number of listings. The picture in Europe is equally bleak. Here, IPO activity is shaping up to be the second slowest year in the last 10 years, behind only 2022’s exceptional slump, with companies raising about US$15.5bn – just over a third of the annual run rate in recent times. Here's the thing: The outlook for 2024 is cloudy owing to the poor performance of recent IPOs and low valuations of publicly listed peers. And yet banks have kept their expensive equity capital markets desks largely intact through the downturn, not wanting to miss any strong rebound. Inevitably, something has got to give. There are several good reasons to think the picture won’t improve next year. For all the negative attention European bourses have received, recent IPOs in the US have also struggled. The post-Labor Day deal flurry was priced too richly and fared poorly. ARM Holdings is up slightly since SoftBank listed the British chip designer, but it is a unique beast given its extremely long and well-established track record in its industry and with investors. Potential technology IPOs for 2024 are more likely to look like decade-old Instacart, which trades about 15% below its IPO price. Venture capital-backed tech unicorns like Databricks will be hoping that the recent stock market rally continues and broadens out beyond the “Magnificent Seven” tech stocks of Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. Artificial intelligence has been a massive tailwind for these mega-cap tech firms, but most of the smaller generative AI companies are still in VC funding mode. The sector that was the obvious candidate to drive IPO activity was fintech payments and neo banks. However, the collapse of valuations of listed lenders and payments firms will make deals difficult for the likes of Stripe, Checkout.com, Revolut and Starling. The private equity pipeline doesn’t look much better. Last month EQT boss Christian Sinding said there’s “dysfunction” in the IPO market and said the private equity giant was testing the idea of private stock sales of its portfolio companies to existing investors. The plan was met with a degree of scorn on the assumption it was an excuse to dodge properly having to mark assets to market. And there is no doubt that deal volumes and exit activity have slowed in private markets, which will also be tougher than in the last decade. Better shape Nevertheless, financial sponsors are in much better shape than active public equity investors, complete with lots of dry powder waiting to be deployed, healthy fundraising rounds under their belts and large private credit businesses to sustain them. All this could mean a trend of more sponsor-backed companies avoiding the IPO route. High-profile share price collapses of private equity-backed IPOs – whether it be the slow burn of a Bumble, or the implosion of CAB Payments – will also make public market investors cautious about taking the other side to sponsors selling large chunks of companies at IPO or soon after. From the private market investor perspective, meanwhile, the thin free-floats of recent deals leave a lot of risk on the table. It may be better to sell the whole business to another sponsor or to a large, publicly listed corporate that is flush with cash. Private ownership is not a silver bullet in itself, but it does give a lot more room for manoeuvre, while no public market investor wants to see a newly listed company warn on profits and need restructuring. On a more abstract level, an IPO is no longer seen

Nuclear green bonds have finally ignited with Canada becoming the first sovereign borrower to add the emissions-free energy source to a green financing framework and EDF seeing hefty oversubscription for its inaugural international issue with a nuclear use of proceeds. The once controversial ESG product now seems set for take-off, though it is unclear whether a prominent green bond index will continue to exclude it. “It's a really great time, with all of [the issuers] being able to get recognition externally that nuclear is a key part of the energy transition,” said Jonathan Hackett, head of sustainable finance and co-head of the energy transition group at Bank of Montreal. Bellwether corporate green issuer EDF’s landmark deal last week “should create a strong precedent for repeat transactions in this format in Europe, building on a range of supply already seen [in Canada]”, said Arthur Krebbers, head of corporate climate and ESG capital markets at NatWest. Hackett pointed to “a continuous trajectory over the last five years” towards nuclear green bonds. This includes issues in 2021 from Canadian utilities Bruce Power and Ontario Power Generation and EDF’s inclusion last year of the category in its framework. Moves have accelerated this year. In June Finnish nuclear power company Teollisuuden Voima established a green bond framework that includes nuclear power. Bankers have also reported greater receptiveness from some previously sceptical European investors. November momentum Momentum has increased further in recent weeks through two heavyweight issuers. The framework for Japan’s “climate transition bonds” – the first sovereign transition instrument that is set for launch in February – showed “next-generation innovative reactors” as one of eight uses of proceeds. Credit Agricole has also added nuclear to its green bond framework. This allows it to lend to nuclear projects in three areas that meet the “substantial contribution criteria” of the EU Taxonomy of sustainable activities: pre-commercial stages of advanced technologies; construction and operation of new plants; and electricity generation from existing installations. Two second-party opinion providers, ISS ESG and Sustainalytics, each affirmed for the first time that nuclear use of proceeds aligns with ICMA's Green Bond Principles. Cicero Shades of Green, part of S&P, rated the Bruce Power and OPG issues as “medium green” in landmark opinions and gave the same rating to EDF’s revised framework in July 2022. “Nuclear energy brings some challenges, but it is a decarbonised form of power and we assess it as such in our second-party opinions. But we don’t automatically give a green shade,” said Christa Clapp, managing director for sustainable finance at S&P and co-founder of Shades of Green, citing checks on mitigation of risks. ISS ESG’s SPO for Credit Agricole added the qualification that in its view, nuclear is an "obstruction" to UN Sustainable Development Goals 7 and 15 (“Affordable and Clean Energy” and “Life on Earth”, respectively) while contributing to SDG 13 (“Climate Action”). Taxonomy trigger The new moves flow from the EU’s hard-fought agreement in July 2022 to include nuclear power in its taxonomy. Canada cited this in the update to its framework, launched originally in March 2022. Now the sovereign may finance several types of nuclear expenditure through green bonds, such as investments in new reactors; refurbishment of existing facilities; research and development; and “some” investments in its nuclear supply chain. Canada has committed to use no proceeds from its oversubscribed C$5bn (US$3.7bn) debut green bond for nuclear expenditure. The sovereign will issue a second bond under the updated framework “before the end of this fiscal year [in March]&

Bermuda is laying out plans to issue a blue bond and create a new blue and green investment fund to back its ocean conservation and decarbonisation efforts as the island nation bids to become a global centre for the world's climate risk capital and underwriting. Bermuda looks after some 460,000 square kilometres of ocean – one of the largest marine areas in the world – and is one of a dozen countries responsible for the Sargasso Sea. It is the most significant environmental custodian of the 14 British Overseas Territories, which account for 85% of the UK's biodiversity. "A blue bond is definitely something that we have in the works," said Walter Roban, Bermuda's deputy premier and minister of home affairs. "We are planning to bring the legislation in the next few months to our legislature and could issue next year." The blue bond, the size of which has not yet been decided, would support Bermuda's developments in offshore wind, renewable energy and other projects within its blue economy, including efforts to become a leader in wave energy. News of the proposed new deal coincides with rising investor interest in blue-labelled financing. The International Finance Corp and T Rowe Price launched a global blue bond strategy on November 22 which aims to improve standards and encourage investment in emerging markets through blue bonds. Bermuda's blue and green investment fund will be structured, managed and operated as a public fund, rather than a government fund, and is already attracting attention from financial institutions. "We've had interest from a number of banks to support this, including HSBC and Clarien Bank, which is based in Bermuda. Local insurers and reinsurers that are interested in meeting their own ESG requirements have also approached us about how they can support our new blue and green investment facility, so we're getting the attention we need," Roban said. The country is pushing through the Marine Development Act, which is expected to be passed shortly and will put a legal governance framework in place for the new fund. In 2018, Bermuda committed to achieve net-zero emissions by 2050 and is on track for an 85% reduction in its carbon footprint by 2035. It also started working with the Waitt Foundation, an NGO which partners with island governments to support the implementation of sustainable ocean plans. Bermuda has developed a blue prosperity plan, which includes a blue economy strategy to expand its ocean-related industries and attract investment, and a marine spatial plan to create a framework for sustainable ocean development, protection and management. "We have aggressively moved forward to develop our own blue economy strategy," Roban said. Bermuda published an environmental white paper on November 29 ahead of this year's UN-convened COP28 climate meeting in Dubai, and is planning to be vocal to ensure substantial action for islands and coastal communities that are at risk. 'Expertise and potential' Bermuda holds a key position in the global insurance and reinsurance industry, providing one-third of the world's catastrophe underwriting. It has insurance assets that it says total more than US$100bn and is aiming to build capacity to become the world's capital of climate risk expertise. "Much of the critical infrastructure to support climate risk finance is already here in Bermuda and we have the expertise and potential to build additional capacity. I think Bermuda is uniquely placed to play a leading role in the area of climate finance solutions," Roban said. However, Bermuda is seeing competition from other Caribbean islands that are seeking to develop similar expertise, including Barbados. Last November AUM Asset Management launched the first insurance-linked securities fund with a Barbados captive insurer rather than a customary Bermuda captive insurer. Roban said Bermuda's reputation in the insurance and reinsurance market and robust regulatory framework will allow it to move quickly as cli

Shein has filed confidentially for a US IPO in what could be one of the biggest listings in New York next year, although the China-founded online fast fashion retailer is facing regulatory challenges and fierce competition. Goldman Sachs, JP Morgan and Morgan Stanley are leading the transaction. The fundraising size has not yet been set but the deal will be a mammoth transaction, given Shein’s last private round in May valued it at around US$66bn, said people with knowledge of the matter. Shein was earlier reportedly looking at a US$80bn–$90bn IPO valuation, down from the US$100bn private valuation it achieved in 2022. “Similar to many other IPO markets around the world, the US IPO market has been challenging this year. Some big listings did not work out very well,” said an ECM banker away from the deal. “However, given its size, Shein should be able to draw some attention from investors.” Founded in 2008 in Nanjing by Chris Xu, Shein specialises in womenswear and also sells men's apparel, children's clothes, accessories and other fashion items. Its products mostly cost less than US$20. The company moved its headquarters to Singapore in 2022 and registered a key business unit there after reportedly deregistering itself in China. The move was seen as a way to distance itself from China given political tensions between China and the US. Being a non-Chinese company could also mean Shein may not need approval from Chinese regulators for an overseas listing. “Shein may not need to get listing approval but most of its supply chains and warehouses are in China. There is still a risk if Chinese authorities are not happy with the listing plan,” said another ECM banker away from the deal. Criticism and scrutiny Shein’s ties with China have drawn criticism from US lawmakers over alleged violations of US import tariff laws, and its labour practices have also come under scrutiny. In June, the US House of Representatives' Select Committee on the Chinese Communist Party said Shein and Temu, a marketplace backed by Chinese e-commerce company Pinduoduo, are building empires around the de minimis loophole in US import rules – dodging import taxes and evading scrutiny on the millions of goods they sell to Americans. Under the de minimis rule, products under a certain value do not attract custom duties. Mike Gallagher, chairman of the committee, said at the time that the US needs to "take a hard look at this loophole that is being abused to tilt the playing field against American companies". US lawmakers have also called on the Securities and Exchange Commission to block the IPO until Shein can prove that it does not use Uyghur forced labour in its supply chain. Shein has denied the allegations. Rising competition from Temu, which also sells cheap products that are shipped directly from Chinese manufacturers, could put pressure on Shein’s IPO. Launched in September last year, Temu has become hugely popular in the US and other countries and its rapid growth has boosted the financial performance of Nasdaq-listed PDD Holdings, which trades as Pinduoduo. Shares in Pinduoduo jumped 18.1% on Tuesday after it posted forecast-beating third-quarter results. Revenue rose 94% on the year to Rmb68.8bn (US$9.6bn) and net income was up 47% at Rmb15.5bn. Shein’s float is set to be the largest by a China-founded company since ride-hailing giant Didi Global's disastrous US$4.4bn NYSE IPO in June 2021. Didi delisted from the US after a year under pressure from Chinese regulators. Last week, Zeekr Intelligent Technology, the premium electric car subsidiary of Geely Automobile, put its planned NYSE IPO of up to US$500m on hold amid weak market sentiment.