Lackluster performances for recent debutants on US exchanges, and a fast-approaching holiday season, have Wall Street mostly looking ahead to next year as the market for initial public offerings remains anemic.
Last week Hamilton Insurance Group and Cargo Therapeutics became the two most recent firms to raise more than $200 million on US exchanges, and their spotty performances in recent days are likely to do little to draw out more candidates for initial public offerings. With three of 2023’s four marquee IPOs stuck below their offer price, despite a market that’s perking up as volatility simmers, some are ready to write off the year.
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“It’s all about 2024 and that’s partly because there’s not much time for this year,” said Joe Kaiser, a managing director at Mercato Partners. “You’re going to lose a week to Thanksgiving and two weeks for the holidays at the end of the year so there’s not much runway until 2024.”
Arm Holdings is the only new company making a sizable debut in the last few months to trade above the price new investors paid, leaving Birkenstock Holding, Instacart, and Klaviyo still struggling. The four firms have helped drive the $24.7 billion raised on US exchanges via IPOs this year, a modest bump from last year’s dearth of offerings, but still a 92% plunge from 2021’s boom, data compiled by Bloomberg show.
The challenged market has been plagued by the Federal Reserve’s interest-rate hiking campaign, two wars and debate over a potential recession. Still, fundamentals have firmed up in recent months, with the Cboe Volatility Index, or VIX, below the closely-watched 15 level and major US equity benchmarks within 2% of recent highs.
To be sure, a few candidates could sneak out before the year draws to a close.
“There’s a good number that could take a look at the remaining window after the Thanksgiving week,” said Mark Schwartz, Ernst & Young’s Americas IPO and SPAC advisory leader. “Whether or not they go or continue to look for more opening windows will be company-specific,” he said, calling out the “calendar issue” with six weeks left in the year.
Chinese electric-vehicle maker Zeekr Intelligent Technology Holding and UL Solutions are among those that could list before the end of the year, after publicly filing for their IPOs within the past week. Whether they go this year or wait until the calendar turns to 2024 would set the stage for a much needed boost to the nascent market.
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KKR & Co-backed BrightSpring Health Services, cloud and data security firm Rubrik and CVC Capital Partners, one of Europe’s biggest private equity firms, are among the roster of companies said to be angling to debut as early as next year, Bloomberg News has reported.
Inflation data on Tuesday spurred a rally across assets that have turned industry participants more optimistic despite geopolitical uncertainty.
“The much-lower inflation numbers suggest that rates aren’t going to go any higher and we may see rate cuts next year and that will cause the market to reopen,” said Kaiser.
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