Two months ago, I wrote a story entitled, “The IPO market is looking very shaky and facing challenges galore.” Two months later, the IPO market is still shaky, but there are definite signs of improvement. First, the broad market is just off new highs, always a good sign for IPOs. Second, three $100 million IPOs have filed to go public in the past week, including Viking (the cruise line operator) and Rubrik, a data management platform. “Recent filings have been encouraging,” Matt Kennedy at Renaissance Capital told me. Third, several recent high-profile IPOs are positive. Among them are venture capital-backed Astera Labs , one of the first AI stories of 2024 (it makes chips that boost the efficiency of servers), a $700 million deal that went public in mid-March at $36, went to $95 and is now at $70, well off its highs but still up 90%. Reddit went public at $34 a day later and is $45 today. That’s a success from the company’s point of view, though it is trading at the lower end of its range since going public. Greg Martin at Rainmaker Securities told me that the recent performance of Reddit and Astera Labs, “Were nice shots in the arm for the IPO market. They’re great data points with quality after-market performance (so far) that there is real market demand for new issuers.” Calendar starting to get busy Finally — and this is the best part — in the next two weeks, at least four IPOs are going public at the NYSE, each with a valuations north of $200 million. The calendar includes UL Solutions (the parent company is Underwriters Laboratories, famous for its product testing, inspection, and certification services), seeking to raise nearly $800 million this Friday at the NYSE. Nursing care facility provider PACS Group is looking to raise $400 million this Thursday at the NYSE. Next week, digital advertising firm Ibotta wants to come public in a $450 million IPO and Centuri Holdings, an energy/utilities infrastructure services company, will try and raise $250 million. Put those four together, and you have $1.9 billion in IPO money in the next two weeks. Is that a little, or a lot? Compared to the last three years, it’s a lot. Here’s a simple way to look at IPOs. The IPO market is seasonal, but on average in a good year (pre-Covid), we might see roughly $1 billion or more a week in IPOs, and we could expect three to five IPOs to raise over $100 million, each week. That hasn’t happened in a long time. Despite a pair of billion-dollar deals in the first quarter (from Astera Labs and Kaspi.kz ), the IPO market raised only $8 billion in Q1, according to Renaissance Capital, about half of what a healthy market would see. But now we have 4 IPOs seeking to raise nearly $2 billion in two weeks. That gets me interested. There are a lot of companies waiting to go public Let’s start with tech hopefuls. Among big VC-backed tech names, Astera Labs has already gone public. Rubrik (cybersecurity, enterprise backup and recovery software) filed on April 1, and may price at the end of this month. Other companies with public filings on offer include Waystar (hospital/medical billing software), and Turo, a car sharing service. Many companies prefer to file confidentially, which means the filing is not yet public, because it provides the most flexibility and companies don’t have to reveal a lot of information to the public too soon. Companies that have confirmed they have filed confidentially or are believed to have done so include Ingram Micro (tech services/software), Circle (crypto/stablecoin), ServiceTitan (software for residential and commercial heating), Del Monte (canned fruit), Panera Bread (restaurant chain), and SeatGeek (online ticket marketplace). Other names floating out there that have not filed but are on the rumor list include Klarna (buy-now-pay-later), Databricks (data software), Epic Games (video games), Rokt (e-commerce/customized deals & discounts), Chobani (yogurt and coffee), Liquid Death (water) and Zipline (supply chain/drone delivery). Stripe (fintech) is also on the rumor list, but it had a tender offer in February that allowed employees to cash out, likely relieving some pressure on the company to go public. As mentioned, Viking submitted an initial filing last week. Barron’s estimated it could have a market value of $10 billion or more. That could go public in early May. Valuations still an issue A major problem last year, particularly for tech-focused VC-backed firms, was declining valuations. The Forge Private Market Index, an index that tracks the performance of 75 actively-traded private companies, plunged 44.3% in 2022 and another 20.2% in 2023. However, it is now at the highest level since mid-October, up 3.7% for the year. “As IPOs start to gain traction, buyers are coming back to the private market,” Howe Ng, head of analytics and investment solutions at Forge, told me. “The renewed enthusiasm is driving some of the recent increases in valuations in private tech stocks.” Even with markets at new highs, the specter of interest rates creeping up is still hanging over the IPO market. “I’m a bit concerned that the market is pricing in more rate cuts than we are likely to see, and if that sentiment changes with upcoming inflation data, fed commentary etc., I’m still concerned that there could be a wet blanket thrown back on the IPO market,” Martin at Rainmaker told me. Most IPO watchers, though, prefer to look on the bright side. “There is better clarity on interest rates although inflation is stickier than expected; but generally [rates are] expected to glide down,” Santosh Rao from Manhattan Venture Partners told me.
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