Mobileye, Intel’s self-driving unit, has filed confidentially for an IPO. Photographer: Krisztian Bocsi/Bloomberg
More than 300 companies are waiting in the wings for the IPO market to reopen so they can go public. But when that will happen is anyone’s guess.
New issues have ground to a near halt this year with just 47 companies, valued at $4.6 billion, using a traditional IPO to list their shares as of June 17. This represents a 74% plunge from the 180 companies that went public, collecting about $70 billion, for the same period in 2021, according to data from Dealogic.
The IPOs launching right now tend to be very small.
Bigger deals, those valued at over $100 million, remain largely on pause but a few companies are braving the IPO waters.
For example, Ivanhoe Electric set terms on Friday for its IPO, which could raise as much as $180 million if it prices on the high end, a prospectus said. The Canadian mining company is scheduled to price its deal on Thursday, a person familiar with the situation said.
Ivanhoe didn’t immediately return messages for comment.
“No sizable IPOs are imminent in sectors which dominated the 2021 IPO calendar including tech and healthcare,” said Justin Kotzin, a managing director and head of capital markets at growth-equity firm General Atlantic.
That is bad news for the nearly 320 companies that a Nasdaq spokesman said are on file with the Securities and Exchange Commission for an IPO as of June 10. These IPOs remain active which means the companies could list whenever they want.
But when that will happen is unclear. Inflation, recession fears, and broad market volatility have caused the IPO window to slam nearly shut in 2022.
New issues typically feed off the broad market. For IPOs to return, the stock market needs to stabilize, bankers and private-equity executives said.
The S&P 500
entered bear market territory on Monday after dropping 3.9% and ended the week down 5.8%. The Dow Jones Industrial Average, meanwhile, fell 4.6% for the time period while the Nasdaq declined 4.8%.
“I don’t know of anyone that is looking to get out in the next month or two,” said Barrett Daniels, U.S. IPO services co-leader, West region SPAC leader at Deloitte, who has advised on IPOs for the past 20 years.
Only the best companies can attempt to reopen the IPO market, the executives said. These companies would need to be larger and profitable or close to profitability. The first few also need to trade well in the aftermarket to restore investor confidence.
Candidates that potentially fit this bill include Instacart, the grocery delivery app, and Mobileye, Intel’s (ticker: INTC) self-driving unit, which have both filed confidentially for IPOs.
If these companies did launch and performed well, the IPO market could be back in business, the executives said.
Instacart and Intel each declined to comment.
The pipeline of companies that are waiting for the IPO market to open includes Corebridge Financial, the life and retirement business of American International Group (AIG); KinderCare Learning Companies, which operates child care centers; and Steinway Musical Instruments Holdings, the renowned piano maker backed by hedge fund mogul John Paulson.
Other companies that have filed confidentially, and could open for trading later this year, include Ampere Computing, the chip maker backed by Oracle (ORCL); Qlik Technologies, the data analytics company backed by the private-equity firm Thoma Bravo; and Reddit, the social-media platform that is home to WallStreetBets.
Some big companies have tested the IPO market this year with little success. Bausch + Lomb (ticker: BLCO), the eye care company owned by Bausch Health (BHC), ended its first day in May as a public company with a $7 billion valuation.
Bausch + Lomb has since fallen below its $18 IPO, ending Friday at $15.75. Its market capitalization has dropped to about $5.6 billion. Parent Bausch Health had expected to take its Solta Medical skin-care unit public but suspended those plans on Thursday.
“All indications point to a quiet third quarter, similar to the second quarter,” said Matt Kennedy, senior IPO strategist at Renaissance Capital.
Some businesses may open for trading after Labor Day but nothing currently indicates a big pickup, he said.
“Depending on market conditions, activity will slowly return in the fourth quarter and then normalize into 2023. That’s my personal prediction,” Kennedy said.
Chobani, the yogurt maker, had filed in November 2021 for an IPO but delayed the offering. In March, Chobani said it would go public whenever the IPO market returned, which could happen in the second half of 2022 or 2023.
Chobani could not immediately be reached for comment.
CB Insights estimated this month that there were over 1,100 unicorn companies, or startups, valued at more than $1 billion, around the world.
General Atlantic’s Kotzin said it’s possible new issues don’t return to 2023, while others are looking toward 2024 for the IPO market to open back up again.
“On the bright side, there is a huge supply of potential deals, hundreds of unicorns, just waiting,” Kennedy said.
Write to Luisa Beltran at [email protected]
