Head of Corporate at VG Global Holdings
(Published 18 July 2023)
The spate of recent initial public offerings have caused a surge of excitement on Wall Street as the previously stagnant market for public listing has been reinvigorated by the likes of Value Village, CAVA, and Kodiak Gas Services, while more names are rumoured to soon join them, like Instacart and VinFast, as well as Stripe.
Companies had been reticent to come to market, thanks to a whole host of issues, including an aggressive central bank policy, economic uncertainty, a geopolitical risk weighing on sentiment, Russia’s invasion of Ukraine, and pressures both internally and globally, which have resulted in the IPO market settling down into a year-long type of hibernation.
While many analysts are now predicting that the drought may be over, for me that does not necessarily mean that the floodgates are ready to open up just yet, especially since it always seems to be pretty quiet in August.
However, we need to understand first what will happen with interest rates and the central banking policy, as there is still an indication that there will be another raise or maybe more by the end of the year, a factor which is always directly linked with whether or not companies take the IPO route or not, and many analysts are still fearful of a recession on the horizon.
However, the M&A market has picked up in recent months, and that is usually a good indication for the IPO market, and there are several companies which have been talked about for a while and could finally go public this year: Chime ($20 billion), Stripe ($55 billion), Birkenstocks, and Instacart, are the big names being mentioned, although none are certain as of yet.
The trends that I’m noticing are that consumer staples and second-hand retail are two sectors which are really picking up, and where the IPOs which have come out have then gone on to rise in price and make a lot of money for the investors concerned.
At the moment we are all waiting and looking at the earnings season in order to understand what the economic environment will be like in the upcoming months, and I think that many CEOs are doing the same thing.
The next couple of months will give a strong indication of how the IPO market will fare over the second half of 2023.