Initial public offerings (IPO) are an important function for society to fund entrepreneurs. However, what explains the number is disputed. One may think that it should be explained by the need for capital but only a part can be explained by that. Instead, this thesis theories that the number of IPOs should be able to be explained by valuation. To test this hypothesis two variables have been thought to affect the valuation: the current market valuation and underpricing. To represent the current valuation the P/E ratio of OMXS30 was used and for underpricing the average underpricing was used. Which later was tested in a regression analysis against the number of IPOs. This study found that there exists a positive correlation between the current market valuation (P/E) and the number of IPOs. The study's result regarding if underpricing could explain the number of IPOs became inconclusive. The finding of P/E ratios correlation to the number of IPOs can in future forecasting be tested and used.