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The beginning of the year saw investors feeling disappointed with the performance of top IPOs, and the interest rates are still skyrocketing.
IPOs pipeline is about to record its all-time high record in the market since it gained the limelight in 2000. Renaissance Capital believes this fall will come with a new record. Towards the end of the year, the IPO market is expected to hold about 375 new deals, which equates to $125 billion, thus making the year the biggest ever since 2000.
This fall, the IPO market recorded several powerful and big consumer names, making the pipeline stronger than ever before. Consumer brand names on file include Warby Parker (prescription eyeglass retailer, a direct listing), Fresh Market (fresh food grocer), Authentic Brands (brand license – Nautica, Eddie Bauer), and Allbirds (sustainable footwear).
Those consumer brand names ready to go public before the year runs out but aren’t listed include; Instacart (grocery delivery), Chobani (Greek yogurt), Sweetgreen (fast-casual salad restaurants), Flipkart (India’s largest online retailer, a Walmart spinout), and Impossible Foods (plant-based meat products).
Another non-consumer brand name is Tech giant digital payment processor Toast. Crypto platforms like Stronghold Digital Mining plans on going public. Other potential candidates include TPG (a global asset manager) and Republic Airways (a regional airline). An electric vehicle maker, Rivian Automotive, has also reportedly filed to go public.
Only Warby Parker has released a statement that it will be going public through a direct listing.
SPACs Are Still in Contention
Special Purpose Acquisition Company will undoubtedly find it difficult to move around the IPO market this time around. Lily McGonagle, an IPO data analyst for Renaissance, said SPACs in the pipeline would have a more challenging time raising IPO capital compared to early 2021 because of a broad-based decline in SPAC returns and greater regulatory scrutiny from the SEC.
According to McGonagle, these two factors could play a role in the decline of SPACs, however, as many as 310 companies could raise as much as $70 billion before the end of the year.
A Good Turn of Event for Record IPOs
The beginning of the year saw IPO investors feeling disappointed with the performance of top IPOs, and the interest rates skyrocketed. The result was devastating, and many investors invested after the first day of trading losses.
Furthermore, Renaissance Capital IPO ETF, an index that tracks about 60 percent of after-market performance of IPOs, had been flat till the end of August. This performance is overshadowed by S&P 500 companies that had gained as much as 20 percent within the period
But after the recent IPO ETF rally, it broke through to its all-time high level since February. IPO experts believe that the trend happened because IPOs were devalued in July and August, leading to a better performance in the market.
Kathleen Smith of Renaissance Capital opined that “the outperformance of the IPO ETF is a signal of a receptive IPO market for companies lined up to go public in the fall.”