U.S. companies and their backers seize on window to sell stock
07/03/2023 17:56
By Echo Wang and Lance Tupper
NEW YORK, March 7 (Reuters) - Sales of shares in
publicly listed U.S. companies had their strongest showing last
week in more than a year, as companies and some of their
shareholders, such as private equity firms, capitalized on the
risk appetite of stock market investors.
Stock sales reached $4.97 billion in the United States last
week, the highest tally since the second week in 2022, according
to data provider Dealogic. Globally, stock sales reached $12.3
billion, the most in more than 30 weeks.
Investment bankers and lawyers say companies are seeing
strong demand for their stock from investors who believe now is
the time to place big bets on the market recovering in the wake
of the Federal Reserve raising interest rates to fight
inflation. It's a risky proposition, so companies and their
backers are seizing on the opportunity for fear it may soon slip
away.
"Equity markets have regained some momentum and volatility
has decreased, driving animal spirits on the buy side," said
Santiago Gilfond, co-head of Americas equity capital markets at
Credit Suisse Group AG CSGN.S . He added that the sellers of
stock have moderated their valuation expectations, helping to
lure buyers.
Last week saw 18 so-called secondary stock sales in the
U.S., including a $1.7 billion divestment by utility company
American Water Works Co Inc AWK.N , the fifth largest U.S.
stock sale since beginning of 2022.
In another notable transaction last week, Oreo cookie maker
Mondelez International Inc MDLZ.O offloaded about a $1 billion
stake in beverage firm Keurig Dr Pepper Inc KDP.O in an
unregistered stock sale, according to a securities filing.
Private equity firms are getting a piece of the action.
Blackstone Inc BX.N last week sold a roughly $270 million
stake in dating app Bumble Inc BMBL.O along with about $220
million position in human resources benefits platform Alight Inc
ALIT.N , and this week, Providence Equity Partners sold a
$333 million stake in software provider DoubleVerify Holdings
Inc DV.N .
The surge in activity has been welcomed by bankers and
lawyers working on these offerings. Collectively they executed
$72.5 billion worth of stock sales for public companies in 2022,
the lowest level since 1996 and a 67% drop from 2021's deal
bonanza, according to Dealogic data.
"Investors are willing to put money to work in a way that
they weren't a year ago," said Michael Kaplan, a capital markets
partner at law firm Davis Polk.
The next frontier for equity capital markets, bankers and
lawyers say, are initial public offerings (IPOs), which have
been subdued since Russia's invasion of Ukraine in February
2022. Unlike secondary stock sales, IPOs take at least a few
days to market to investors, and several months to prepare, so
companies can't be as nimble in pursuing them when the market
becomes welcoming.
A busy week for initial public offerings in early February
offered some hope to stock market hopefuls, but advisors remain
cautious as stocks sold off in recent weeks.
(Reporting by Echo Wang and Lance Tapper in New York; Editing
by Chizu Nomiyama)
((E.Wang@thomsonreuters.com; +1 9172873971; Reuters Messaging:
E.Wang@thomsonreuters.com@reuters.net))