(Bloomberg) -- Walmart Inc.’s $3.6 billion exit from China’s JD.com Inc. helped make August the busiest month since May for US sales of new and existing shares in already-public companies.
More than $13 billion worth of shares changed hands through Aug. 28, excluding initial public offerings, according to data compiled Bloomberg. In addition to Walmart selling its entire stake in its Chinese e-commerce partner, Toronto-Dominion Bank sold a block of Charles Schwab Corp. shares to raise $2.5 billion and a Cava Group Inc. shareholder divested shares for about $702 million.
The deals occurred in the final two weeks of August, a time of year when the ECM market is typically quiet and portfolio managers and investment banks take their summer holidays. Last year, only $162 million was raised in the second half of August, the data compiled by Bloomberg show.
“August looked like a relatively good window where there was limited competing supply and a constructive market backdrop,” said Arnaud Blanchard, global co-head of equity capital markets at Morgan Stanley, the sole bookrunner working on Walmart’s JD offering. “For the right transaction and the right story, it felt that it was actually a better window than August traditionally is.”
The transactions were helped by a rebound in the S&P 500 Index to near all-time highs following comments by Federal Reserve Chair Jerome Powell — according to whom “the time has come” for US interest rate cuts — and a retreat in the Cboe Volatility Index, or VIX, to the mid-to-high teens after a sharp increase in the beginning of August.
Artal International SCA, an investor in Cava since its Series A round in 2015, timed its offering of 6 million shares in the Mediterranean restaurant chain at its highest close ever of $125.80 on Monday. Cava debuted about a year ago at an offer price of $22 per share.
Walmart said the offering is consistent with its strategy to “align our portfolio,” and that the decision to sell the JD.com stake “allows us to focus on our strong China operations for Walmart China and Sam’s Club, and deploy capital towards other priorities.” A spokesperson for Charles Schwab declined to comment, while representatives for Cava, JD.com and Artal didn’t immediately respond to requests for comment.
A recent broadening of market gains beyond a select few provided a favorable backdrop for an acceleration in strategic sell-downs, a theme that’s been percolating in 2024 as multi-year investments are ripe for harvesting. Several of the largest share sales this year were carried out by strategic investors, including a $3.6 billion deal by Johnson & Johnson to exit its remaining holding in Kenvue Inc., the business it took public in May 2023.
“A number of large corporates are focused on optimizing their balance sheet and capital allocation strategy. So monetizing holdings is an efficient tool that has been used at attractive prices recently,” Morgan Stanley’s Blanchard said.
Blanchard expects sales of shares in listed companies to continue into the final quarter of the year. “Our pipeline is robust. With the US election, the timeline feels more compressed than usual,” he said.
“So for anyone who has plans to access the markets, September is actually going to be a good window.”
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