Despite challenging global economic conditions and geopolitical situations, the outlook for the IPO market is expected to improve next year, Goldman Sachs said in a briefing released on Friday.

The outlook is expected to be the same for dealmaking, and corporate and investor activity, as companies continue to innovate and step up their strategic activity.

The IPO market has started to pick up in recent months and is poised to accelerate in the back half of 2024, especially if the interest rates will drop next year, according to Dan Dees, co-head of Goldman Sachs’ Global Banking & Markets business.

“When you step back even further, I think the environment for capital raising will be very robust because it has to be in the years ahead,” Dees noted. “We are in the age of innovation, of accelerating innovation. All that innovation needs to be funded.”

As for dealmaking, the outlook is also set to improve, particularly for mergers and acquisitions (M&A).

“I think corporates in some places are getting priced out of the market, and I do expect to see corporates starting to step in and fill the void,” said Jim Esposito, also the co-head of Goldman Sachs’ Global Banking & Markets business. “We do expect to see a reasonable pickup in dealmaking activity, especially now that we seem to be through the other side of this interest rate hiking cycle.”

Countries in the Gulf, particularly the UAE and Saudi Arabia, have recently seen a flurry of IPOs as governments seek to attract more investments and boost capital markets.

During the first nine months of the year, IPOs in the GCC raised a total of $6.8 billion, with the UAE market leading the region in terms of proceeds, according to Kuwait Financial Centre (Markaz).

The funds were raised through 29 offerings. In the UAE, four offerings raised a total of $3.9 billion during the same period.

Listings on the Abu Dhabi Securities Exchange (ADX) posted the highest proceeds with $3.7 billion, while listings on the Dubai Financial Market (DFM) raised a total of $0.2 billion.

(Writing by Cleofe Maceda; editing by Seban Scaria)