U.S. IPO boom braves market volatility

Teads Holding

11/10/2021 15:44

By Echo Wang and Anirban Sen
    Oct 11 (Reuters) - Weeks of stock market volatility have
done little to dent the record-setting pace of U.S. initial
public offerings, with capital market insiders forecasting a
strong finish to the year and a robust pipeline of listings in
2022.
    More than 2,000 IPOs raised a combined $421 billion globally
by the end of September, a record high, as private companies
rushed to attain the soaring valuations of their publicly listed
peers. That was more than double the proceeds raised during the
same period last year, according to Refinitiv data. 
    Four IPOs were withdrawn or postponed in the United States
in the last three weeks, according to Dealogic. Uncertainty over
the U.S. debt ceiling, the financial woes of Chinese property
developer Evergrande and spiraling energy prices and inflation
fueled wild swings in the stock market, making it more difficult
for companies to price their stock market debuts. 
    Still, U.S. IPOs proved more resilient than those in Europe,
where seven listings were pulled. With U.S. lawmakers agreeing
last week to postpone the debt ceiling issue for two months and
investors coming to grips with the Chinese property market's
jitters, IPO bankers and lawyers said most companies were
keeping their listing plans on track.
    "We see not only new deals coming to the market, we see
existing engagements continuing to move forward," said Marc
Jaffe, managing partner of law firm Latham & Watkins' New York
office. 
    In the last three weeks, IFIT Health & Fitness Inc  IFIT.O ,
owner of the NordicTrack fitness brand, Allvue Systems Holdings,
an alternative investment technology solutions provider, and
Cingulate and AEON Biopharma, two biotechnology firms, pulled
their U.S. IPOs, blaming market volatility. 
    IPO hopefuls that braved the market volatility were rewarded
by investors, albeit less than they previously expected. Shares
of U.S. companies that went public in the last four weeks have
gone up 25.5% on average, compared with a 42% rise in value for
those that went public this time about four months ago,
according to Dealogic. 
    Jim Cooney, head of Americas equity capital markets at Bank
of America Corp  BAC.N , said the recent IPO jitters showed that
the market was resilient, but that investors were becoming more
selective.
    "Investors have narrowed the scope of investments to
consider given overall muted performance in the secondary
market," Cooney said.
    Among the biggest high-profile IPOs expected by the end of
the year are those of electric vehicle market Rivian Automotive
and chipmaker GlobalFoundries.  More are expected soon, industry
insiders said. 
    "There are kick-off meetings and bake-offs and preparation
is underway for what looks like an equally strong 2022
pipeline," Latham & Watkins' Jaffe said.

 (Reporting by Echo Wang in New York and Anirban Sen in
Bangalore; Editing by Dan Grebler)
 ((E.Wang@thomsonreuters.com; +1 9172873971; Reuters Messaging:
E.Wang@thomsonreuters.com@reuters.net))