SAN FRANCISCO: A pair of companies have delayed their initial public offerings (IPOs), sending a ripple of anxiety through the US market as investors wait for Anthropic PBC’s hotly anticipated debut to materialise.
Nuclear power services firm Holtec Nuclear Corp and CVC Capital Partners-backed Bamboo Insurance Services Inc postponed their IPOs within days of each other, citing market conditions.
The decisions coincide with a quieter than expected September IPO market, with just three debuts in the typically vibrant period after the Labour Day holiday.
Expectations of Anthropic’s public filing as soon as late August haven’t come to pass, with the artificial intelligence (AI) company instead unveiling a new, more cost-efficient model and addressing rising concern over fears of an AI-driven apocalypse.
The company is seeking to raise as much as or more than SpaceX did in its record-setting debut.
The slowdown in smaller IPOs provides a note of caution for companies and their backers.
Asset owners including private equity firms need to weigh whether a few pulled deals signal that getting the valuation they expect could be a challenge in this market.
“What makes it especially surprising is the Nasdaq just hit a record high, it’s not like there’s a big market downturn,” said Jay Ritter, director of the IPO Initiative at the University of Florida.
Stock market performance has broadly held up despite volatility in energy prices and the Federal Reserve’s (Fed) move to tame inflation.
The S&P 500 Index has climbed 1.1% so far in September while the Nasdaq Composite Index has rallied more than 3% to a record high.
Of the more than two dozen companies working with at least one top Wall Street investment bank on their US IPOs, and that have filed publicly since the start of July, only nine have gone public, according to data compiled by Bloomberg.
Three are currently taking orders: Smart ring-maker Oura Inc and some of its backers are seeking to raise as much as US$2.2bil in an IPO next week, the same day as data centre (DC) infrastructure firm Accelevation Holdings Corp’s offering, which is targeting a US$720mil raise.
Thanks in part to megadeals like SpaceX’s US$86.2bil debut and South Korean chipmaker SK Hynix Inc’s US$26.5bil offering of American depositary receipts, US listings this year have delivered the highest volume since 2021, with US$161.4bil raised excluding blank-check firms and other financial vehicles, data compiled show.
A few large deals haven’t necessarily translated into an easy fundraising environment.
Some firms and backers were wary of advancing IPO plans close to when Anthropic was expected to file publicly, as they found it difficult to get the attention of long-term-oriented investors and sovereign wealth funds, people familiar with the preparations said last month.
While companies may still find enough demand in the market to complete a listing, they may be reluctant to pull the trigger if they can afford to wait for a better window.
“There’s a calculus of how much does a company need the cash and how much can they wait to get a bigger bang for their buck,” said Larry Tabb, global head of financial sector research at Bloomberg Intelligence.
Companies that file for an IPO typically expect to debut within a month, though market jitters and underwhelming performances among peers can slow them down.
Gas-station and convenience-store operator Cumberland Farms Ltd filed for an IPO in early July while Intel Corp-backed semiconductor firm Syntiant Corp and menswear company Tailored Brands Inc made their paperwork public in the days after.
Temporary power systems provider Aggreko Inc and SoftBank Group Corp-backed AI infrastructure developer SB Energy Inc filed before Labour Day and have yet to begin formal marketing.
The Fed’s rate hike earlier this month, and the likelihood of another in the near future, hasn’t helped companies using debt to drive spending.
“A rising rate environment hits the value of future cash flows and you have the higher cost of debt to do things like build DCs, so it is kind of a double whammy,” said Matt Kennedy, senior strategist at IPO research firm Renaissance Capital.
Even before the latest move, performances from recent US IPOs was volatile. Shares of five of the 10 largest listings this year are trading below their respective IPO prices. — Bloomberg
