(Bloomberg) -- Companies looking to go public in the US this year have seemingly given up on the traditional window after the Labor Day holiday in September, dashing hopes for a rush of deals ahead of the presidential election.
Proceeds from inaugural share sales on the public markets have brought in $7.7 billion since Sept. 2, data compiled by Bloomberg show. That’s about one-fifth of total volume so far and significantly lower than this time last year, when Arm Holdings Plc and others raised $9.6 billion.
Offerings from ticket platform StubHub and AI semiconductor maker Cerebras Systems, both of which were weighing fall debuts, have yet to materialize. And heavyweight contenders including fintech groups Chime Financial Inc. and Klarna Bank AB are already focusing on 2025.
“We came into the beginning of the second half feeling good about our IPO pipeline, but then a number of quite idiosyncratic things happened to our deals which impacted timing,” said Tom Swerling, global head of equity capital markets at Barclays Plc.
Last month’s interest rate cut from the Federal Reserve did little to turn the tide for first-time share sales, despite equity benchmarks trading near-all time highs and volatility gauges largely moving in ranges conducive to IPOs.
“The year in general for me was much softer than I would’ve predicted a year ago,” said Matthew Witheiler, head of Wellington Management’s late-stage growth equity business. “Companies that haven’t gone are hesitating because of dynamics within their specific businesses, not because of market conditions and demand.”
Some companies that bankers and investors had pointed to as likely candidates are taking steps to shore up their finances — like Grupo Aeromexico SAB, which sold $1.1 billion of bonds to refinance its debt.
StandardAero Inc.’s $1.7 billion offering marked the biggest debut over the eight-week stretch, with shares up more than 20% since the IPO. Shares of Partners Group Holding AG-backed KinderCare Learning Cos. are trading 20% higher after the company priced a $576 million offering close to the bottom of its marketed range, while Ingram Micro Holding Corp. priced its IPO giving it a value of about $5.2 billion — well below the $10 billion valuation it had considered seeking, Bloomberg News has reported.
Whipsawing markets in early August spooked some would-be issuers and forced companies to “re-examine their paths,” said Evan Riley, Americas head of equity capital markets at BNP Paribas SA. “The question for some became whether you needed to hit a skinny window with some risk and the answer was no,” Riley said in an interview.
Now, with the US election less than a week away, bankers and lawyers are shifting their focus toward secondary deals. Boeing Co. earlier this week raised $21.1 billion and JAB Holding Co. sold nearly $2 billion of Keurig Dr Pepper Inc. stock.
The market for IPOs will essentially be closed through next month’s Thanksgiving holiday. “It will be pretty quiet for the rest of the year,” said Daniel Forman, a partner at Ropes & Gray. “There’s building uncertainty around the election and the differences around economic policies,” he said, adding that tariffs proposed by Donald Trump are an “additional variable to consider.”
Even December could be tough for IPO candidates, as investors likely want to lock in their gains after a more than 22% increase in the S&P 500 so far this year. “If you’re going to go public in the December window, you’re threading the needle and you’ll need everything to work,” said Seth Rubin, global head of equity capital markets at Stifel Financial Corp.
©2024 Bloomberg L.P.