U.S. IPO boom braves market volatility

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Oct 11 (Businesshala) – Weeks of stock market volatility have done little to dampen the record-setting pace of U.S. initial public offerings, with capital market insiders predicting a strong end to the year and a listing in 2022. Strong pipeline is predicted.

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More than 2,000 IPOs raised a combined $421 billion globally as of the end of September, a record high, as private companies rushed to garner the rising valuations of their publicly listed peers. According to data from Refinitiv, this was more than double the income it raised during the same period last year.

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According to Dealogic, four IPOs in the United States were withdrawn or postponed in the past three weeks. Uncertainty over US debt limits, Chinese property developer Evergrande’s financial woes and rising energy prices and inflation fueled wild swings in the stock market, making it more difficult for companies to price their stock market debuts.

Still, US IPOs proved more resilient than Europe, where seven listings were pulled. With US lawmakers last week postponing the debt limit issue for two months and investors coming to terms with the shock of the Chinese property market, IPO bankers and lawyers said most companies were keeping their listing plans on track.

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“Not only are we seeing new deals in the market, we see existing engagements moving forward,” said Mark Jaffe, managing partner at the New York office of law firm Latham & Watkins.

In the past three weeks, IFIT Health & Fitness Inc. (IFIT.o), owner of the NordicTrack fitness brand, Allview Systems Holdings, an alternative investment technology solutions provider, and Cingulate and AEON Biopharma, two biotechnology firms, pulled off their US IPOs. . Blame the volatility of the market.

IPOs that faced market volatility were rewarded by investors, although they were less than before. Shares of US companies that went public have risen an average of 25.5% in the past four weeks, while this time around four months ago the value of those that went public has risen 42%, according to Dealogic.

Jim Cooney, head of US equity capital markets at Bank of America Corp (BAC.N), said the recent IPO shock showed the market was resilient, but investors were becoming more selective.

“Investors have narrowed the investment horizon given the overall muted performance in the secondary market,” Cooney said.

The biggest high-profile IPOs by the end of the year include electric vehicle market Rivian Automotive and chipmaker GlobalFoundries. Industry insiders said more are expected soon.

“There are kick-off meetings and bake-offs and preparations are underway for what looks like an equally strong 2022 pipeline,” said Latham & Watkins Jaffe.

Reporting by Iko Wang in New York and Anirban Sen in Bangalore; Editing by Dan Grebler

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