Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Tim Stenebek on Bloomberg Radio.
Speaker 2: No, it's often missing from Charlie's updates.
Speaker 3: What talk of IPOs, Well, that's missing from pretty much
Speaker 3: everything lately.
Speaker 2: It has not been a happening scene. Although there was
Speaker 2: a couple of stories today, arm which is of course
Speaker 2: backed by SoftBank, in talks with Nvidia to join maybe
Speaker 2: a group of investors potential investors to anchor it's IPO,
Speaker 2: that's according to FT. And then you had JBS, the
Speaker 2: world's largest meat supplier, filing with the SEC that it
Speaker 2: is actually finally, finally, finally moving ahead with its long
Speaker 2: delayed plan to list on the NYSESE. So maybe things
Speaker 2: are starting to move a little bit.
Speaker 3: Maybe. But I like to type IPO, go on my
Speaker 3: Bloomberg terminal and what do you say? And then click
Speaker 3: on time series and deal count, and I see that
Speaker 3: in the let's say, fourth quarter of twenty twenty two,
Speaker 3: we had four hundred and fifty nine IPOs, and in
Speaker 3: the first quarter of twenty three we had three hundred
Speaker 3: and fifteen IPOs, And that has been kind of the trend.
Speaker 2: Yeah, it's it's like pretty shocking how much it's down. Hey,
Speaker 2: so let's see what Rachel Gering is seeing. She's Ey
Speaker 2: America's IPO leader. She's with us on zoom from Nashville, Tennessee.
Speaker 2: So Rachel, good to have you back again. Has your
Speaker 2: team just said, listen, go take like a six month
Speaker 2: vacation and come back in twenty twenty fourth and she'll
Speaker 2: be a better what's it like? Tell us about the environment.
Speaker 1: Well, it's definitely a bit chilly out there, but we're
Speaker 1: not packing up and taking long vacations by any means.
Speaker 1: There's continues to be strong interest of companies interested in
Speaker 1: IPOs and planning to ipo when the market's right for them.
Speaker 1: But there's definitely very much a wait and see atmosphere continuing.
Speaker 1: But we're hearing good news even today that hopefully will
Speaker 1: just help build and continue building some momentum that we
Speaker 1: need to see that open up the IPO market.
Speaker 3: What is the problem right now? Why don't investors want
Speaker 3: to see IPOs? This market has been fantastic if you
Speaker 3: look at the gains that we've had. It's not only
Speaker 3: the Nasdaq, the S and P in the Dow Jones
Speaker 3: are up this year as well, why don't people want
Speaker 3: to buy new companies?
Speaker 1: Well, I think there's a multitude of factors, and some
Speaker 1: of it is also driven by valuation. Investors are willing
Speaker 1: to invest in the asset class, but not at any price.
Speaker 1: So there's still that tension between what a company is
Speaker 1: needing and wanting from evaluation versus what investors are willing
Speaker 1: to pay. So that's still working its way out. We're
Speaker 1: still we're seeing some good deals occurring, even you know,
Speaker 1: recently in Q two, so you know, through through the
Speaker 1: first half of twenty twenty three in the US, we're
Speaker 1: at about sixty three IPOs. Q one to Q two
Speaker 1: was relatively flat and volume, but proceeds more than doubled
Speaker 1: in just Q two, largely one IPO raising four point
Speaker 1: four billion in May. But we're starting to see some
Speaker 1: strong deals, some strong valuations. These companies need to perform
Speaker 1: price well and then perform in the aftermarket and that
Speaker 1: will hopefully drive continued interest from investors.
Speaker 2: Rachel. It's interesting. We had on an individual who's been
Speaker 2: in the real estate for a long time, and she
Speaker 2: basically just is saying that sellers maybe have to come
Speaker 2: down a little bit in the real estate market that
Speaker 2: they think, Okay, I'm really worth this, and buyers are
Speaker 2: saying nope, not even And so there needs to be
Speaker 2: a bit of a reckoning in terms of those individuals
Speaker 2: or those companies looking to go public. Do they need
Speaker 2: to have a little bit of a reckoning about valuations
Speaker 2: and maybe lower their expectations and that's ultimately what will
Speaker 2: open up the IPO market.
Speaker 1: There is definitely that occurring in that reckoning, as you mentioned.
Speaker 2: But does it need to happen even more? That's what
Speaker 2: I guess I'm asking.
Speaker 1: Yes, it'll need to happen an even more. But then
Speaker 1: also the macroeconomic backdrop, we need to continue seeing the
Speaker 1: improvements that we're starting to see, but we need to
Speaker 1: see those sustained to also get companies interested in entering
Speaker 1: the market. So the inflation news from today is definitely positive.
Speaker 1: Volatility is back to pre COVID lows, you know, interest
Speaker 1: rate hikes are starting to slow, hopefully they're coming to
Speaker 1: an end. So those factors also are influencing companies coming
Speaker 1: to market, and they're just willingness to given just the
Speaker 1: unpredictability that has been occurring over the last several quarters.
Speaker 3: I mean, Rachel I look at the IPO pipeline in
Speaker 3: my mind and I see it, you know, getting ready
Speaker 3: to burst. We have private equity women and men in
Speaker 3: this studio and over the past few months they've been
Speaker 3: genuinely frustrated because they don't see any movement. They want
Speaker 3: to have exits and if they don't have those, their
Speaker 3: business model is in deep trouble. So there must be
Speaker 3: a lot of companies that are ready when the time
Speaker 3: is right to go public.
Speaker 1: Absolutely, which is why you know, myself and my team
Speaker 1: we haven't taken a vacation, as we were joking earlier.
Speaker 1: There are definitely companies. The pipeline is strong, and there's
Speaker 1: still high interest. It's just more around the timing that's
Speaker 1: right for the organization and valuation.
Speaker 2: Well, and it's interesting, but is it tougher. I mean,
Speaker 2: we've talked about the benefit of startups is you know,
Speaker 2: there is a lot of money slashing around in the
Speaker 2: private world and private markets that they have the luxury
Speaker 2: of staying private for a lot longer. Do you continue
Speaker 2: to see that trend as well? That that's and some
Speaker 2: would say that's a benefit. It gives them time to
Speaker 2: really develop, really become a profitable company. So that when
Speaker 2: they do maybe ultimately do their exit in the public markets,
Speaker 2: they're a viable company.
Speaker 1: Yeah, we're still seeing some slowness even in the private
Speaker 1: financing side. There's a lot of dry powder out there.
Speaker 1: But investors are discerning and they are being They are
Speaker 1: looking for the right companies to invest in. For the
Speaker 1: For the larger, more pre ip companies, a lot of
Speaker 1: them took advantage of the market in twenty one and
Speaker 1: so they probably do have enough capital to sustain, so
Speaker 1: they're not looking to needing to raise proceeds immediately, largely
Speaker 1: because they took advantage of the market, you know, well
Speaker 1: over a year ago.
Speaker 3: Are there any other exits that have kind of taken
Speaker 3: up the slack? Are there any other liquidity events as
Speaker 3: some people call them, that are taking up the slack
Speaker 3: of the lack of IPOs.
Speaker 1: Well, you know, the other thing we're seeing even in
Speaker 1: the IPO market and so forth, is just from the corporates.
Speaker 1: Corporates are actively exploring ways to unlock value as well,
Speaker 1: and so we started to We've seen a couple now
Speaker 1: spin transactions coming out of the corporates, and we expect
Speaker 1: to see more of those in the pipeline as well.
Speaker 2: What about when you talk about that there's a lot
Speaker 2: of interest in companies. I guess talking with you and
Speaker 2: your team about wanting to go public, what types of
Speaker 2: companies in terms of sizes, valuation, And I'm really curious
Speaker 2: about industries, like are you seeing all of a sudden
Speaker 2: a surge in AI type companies that want to go public?
Speaker 2: They're just kind of waiting. So can you walk us
Speaker 2: through some of that specificity.
Speaker 1: The interesting point is even what we're seeing with the
Speaker 1: completed IPOs occurring now and then the companies that we're
Speaker 1: working with in the pipeline across all sectors. You know,
Speaker 1: the volumes are still being driven off of technology in
Speaker 1: life sciences, but the larger deals are occurring, you know,
Speaker 1: across retail, consumer, energy, financial, so forth. So we're seeing
Speaker 1: a good variety across sector. And what investors are are
Speaker 1: definitely focused on are profitability. So it's not growth at
Speaker 1: all costs, but it's growth and profitability. So those more
Speaker 1: mature companies that have a longer track record are those
Speaker 1: that we're seeing, you know, probably will come to continue
Speaker 1: coming to market in these earlier stages.
Speaker 3: Rachel, what do you expect for next year? Do you
Speaker 3: think it's going to be a better year or are
Speaker 3: you worried that a recession is going to make it worse.
Speaker 1: We're optimistic. We think that activity will if we continue
Speaker 1: to see the improved macro economic backdrop that we talked about.
Speaker 1: If that continues to improve and even you know, get better,
Speaker 1: then I think the back half of this year and
Speaker 1: then definitely twenty twenty four is going to be a
Speaker 1: really promising year for IPOs.
Speaker 2: All right, interesting stuff. We will certainly be on it, Rachel.
Speaker 2: Thank you so much. Rachel Goering, she's IPO leader of
Speaker 2: u I Americas. On zoom from Nashville, Tennessee.