1
00:00:00,120 --> 00:00:03,920
Speaker 1: These sees Bloomberg Business Week with Carol Messer and Tim

2
00:00:04,000 --> 00:00:28,440
Speaker 1: Stinebeck on Bloomberg Radio. Alright, Mike, let's talk about the

3
00:00:28,480 --> 00:00:31,040
Speaker 1: ip O business, one of my favorite businesses. I did

4
00:00:31,040 --> 00:00:33,280
Speaker 1: a ton of IPOs back in the day. It's always

5
00:00:33,320 --> 00:00:36,000
Speaker 1: fun bringing a new company to market. See how the

6
00:00:36,040 --> 00:00:38,600
Speaker 1: management team does in front of investors, See how investors

7
00:00:38,640 --> 00:00:42,199
Speaker 1: react to you know, new stories, new management teams, um

8
00:00:42,320 --> 00:00:45,000
Speaker 1: and uh, not so much. This year, I'll talk about

9
00:00:45,040 --> 00:00:47,360
Speaker 1: something else that's dead. You know, you got tumble weed

10
00:00:47,360 --> 00:00:50,880
Speaker 1: blowing through the IPO IPO desks and exactly right, and

11
00:00:50,920 --> 00:00:52,839
Speaker 1: they're gonna see it in their bonus checks. Unfortunately, are

12
00:00:52,840 --> 00:00:55,680
Speaker 1: good friends there. But check this data out Ernst and Young,

13
00:00:55,840 --> 00:00:57,400
Speaker 1: that's how I refer to them. But their e Y,

14
00:00:57,520 --> 00:01:00,680
Speaker 1: that's their their new branding EY. Reaching least, it's quarterly

15
00:01:00,720 --> 00:01:08,240
Speaker 1: IPO data report which shows overall deal proceeds dropped and

16
00:01:08,319 --> 00:01:10,640
Speaker 1: a number of deals dropped seventy percent. I don't think

17
00:01:10,680 --> 00:01:13,000
Speaker 1: I've ever seen numbers like that. So let's stake into that.

18
00:01:13,440 --> 00:01:15,440
Speaker 1: We can do that with rape. Rachel Garring, I p

19
00:01:15,600 --> 00:01:20,080
Speaker 1: O leader, uh tough business in two for Uy Americas.

20
00:01:20,120 --> 00:01:24,240
Speaker 1: She joins us via zoom from Nashville, Tennessee. Rachel, thank

21
00:01:24,240 --> 00:01:26,360
Speaker 1: you so much for joining us here. I don't think

22
00:01:26,360 --> 00:01:28,920
Speaker 1: I've ever seen numbers like that. Help give us some

23
00:01:29,040 --> 00:01:31,280
Speaker 1: contexts for what happened in the I p O market

24
00:01:31,360 --> 00:01:35,640
Speaker 1: this year. Well, the I p O market certainly took

25
00:01:36,200 --> 00:01:40,479
Speaker 1: a reverse turn from what we saw in roughly ninety

26
00:01:40,680 --> 00:01:43,160
Speaker 1: I p O s um here in the US, which

27
00:01:43,280 --> 00:01:46,200
Speaker 1: is the lowest number in volume that we've seen since

28
00:01:46,280 --> 00:01:50,040
Speaker 1: two thousand and nine, eight point six billion in proceeds raise,

29
00:01:50,160 --> 00:01:52,680
Speaker 1: which is the lowest in proceeds raised we've seen in

30
00:01:52,760 --> 00:01:55,720
Speaker 1: over two decades so far from what we saw in

31
00:01:56,480 --> 00:01:59,840
Speaker 1: one that broke records, going all in the opposite direction. Well,

32
00:02:00,000 --> 00:02:01,640
Speaker 1: it's a good point, you know, these year over year

33
00:02:01,720 --> 00:02:05,280
Speaker 1: numbers are comparing the market to a just a bonanza.

34
00:02:05,480 --> 00:02:08,280
Speaker 1: Everyone was coming to market, uh, spacks and everything else

35
00:02:08,320 --> 00:02:10,960
Speaker 1: in I guess so that that's part of the story

36
00:02:11,040 --> 00:02:15,440
Speaker 1: behind that huge percentage shop. But Rachel, how does this

37
00:02:15,680 --> 00:02:19,000
Speaker 1: look now going forward? Or is there now a bottleneck

38
00:02:19,400 --> 00:02:21,680
Speaker 1: of I p O s that we'll see in three

39
00:02:21,720 --> 00:02:23,799
Speaker 1: if the conditions are a little bit better, you know,

40
00:02:23,880 --> 00:02:26,400
Speaker 1: can we expect to see a lot of deals that

41
00:02:26,480 --> 00:02:29,359
Speaker 1: were canceled sort of come come to market next year.

42
00:02:30,680 --> 00:02:34,000
Speaker 1: It's hard to say what certainly has been impacting the

43
00:02:34,200 --> 00:02:36,560
Speaker 1: I p O market for twenty two. And I've heard

44
00:02:36,600 --> 00:02:39,600
Speaker 1: in your earlier segment those those headwinds that all companies

45
00:02:39,639 --> 00:02:42,799
Speaker 1: are facing, you know, are not going to change course

46
00:02:42,919 --> 00:02:47,239
Speaker 1: immediately in three. So expect a slower start in in

47
00:02:47,360 --> 00:02:50,600
Speaker 1: twenty three, hopeful for the back end of twenty three

48
00:02:50,720 --> 00:02:54,480
Speaker 1: for volatility to settle out and the market to reopen,

49
00:02:54,880 --> 00:02:57,120
Speaker 1: and then certainly into twenty four we can start to

50
00:02:57,160 --> 00:02:59,679
Speaker 1: be optimistic as well. But we we need you know,

51
00:02:59,760 --> 00:03:03,200
Speaker 1: come needs to come to market that have strong performance,

52
00:03:03,520 --> 00:03:06,519
Speaker 1: strong profitability. Those are what those are the types of

53
00:03:06,560 --> 00:03:09,120
Speaker 1: companies that are really going to attract investors on the onset.

54
00:03:09,440 --> 00:03:12,280
Speaker 1: All right, well, given that backdrop Rachel is the sack

55
00:03:12,360 --> 00:03:16,240
Speaker 1: market dead, I don't think this back market is dead.

56
00:03:16,720 --> 00:03:18,840
Speaker 1: We're not going to see the volumes that we've seen

57
00:03:18,960 --> 00:03:23,280
Speaker 1: in UM. We need three things to happen with SPACs. One,

58
00:03:23,560 --> 00:03:26,040
Speaker 1: some of the backlog needs to be cleared out, so

59
00:03:26,360 --> 00:03:29,560
Speaker 1: we will continue to see liquidations and then hopefully also

60
00:03:29,680 --> 00:03:33,600
Speaker 1: some deal announcements in mergers to be completed. We also

61
00:03:33,639 --> 00:03:36,920
Speaker 1: need the regulatory overhang to clear out, so final rulemaking

62
00:03:37,080 --> 00:03:41,040
Speaker 1: from the SEC and then um third is overall market

63
00:03:41,080 --> 00:03:44,520
Speaker 1: perception really needs to improve around SPACs, and so that's

64
00:03:44,560 --> 00:03:47,880
Speaker 1: going to start with performance of those companies that already

65
00:03:47,920 --> 00:03:51,200
Speaker 1: completed a DESPAC to start to improve and really drive

66
00:03:51,280 --> 00:03:55,720
Speaker 1: some um improved investor perception. You know, Rachel Paul made

67
00:03:55,720 --> 00:03:59,560
Speaker 1: a good point about the actual bankers, the humans involved

68
00:03:59,600 --> 00:04:01,520
Speaker 1: in all these deals. What do you think most banks

69
00:04:01,600 --> 00:04:04,640
Speaker 1: do do they do they keep these bankers around in

70
00:04:04,800 --> 00:04:07,840
Speaker 1: case there is a rebound or maybe you know, if

71
00:04:07,880 --> 00:04:11,200
Speaker 1: things get bad enough, there's a lot of secondary offerings

72
00:04:11,280 --> 00:04:13,200
Speaker 1: to work through. What what is you know, kind of

73
00:04:13,280 --> 00:04:16,080
Speaker 1: the mood of the bosses, of the bankers, of of

74
00:04:16,160 --> 00:04:20,880
Speaker 1: ip O desks going into Yeah, it's hard for me

75
00:04:21,000 --> 00:04:23,640
Speaker 1: to say in terms of, you know, the exact mood

76
00:04:24,120 --> 00:04:26,120
Speaker 1: um in the on the banking side of the house.

77
00:04:26,279 --> 00:04:28,880
Speaker 1: But the one thing I would say is we've been

78
00:04:28,960 --> 00:04:32,560
Speaker 1: here before. We've seen retrenchments in I p O activity

79
00:04:33,000 --> 00:04:35,920
Speaker 1: like we're experiencing right now, and we've also seen the

80
00:04:36,000 --> 00:04:39,520
Speaker 1: quick recoveries that come. So it's hard to predict exactly

81
00:04:39,640 --> 00:04:42,320
Speaker 1: when that I p O recovery will occur, but when

82
00:04:42,360 --> 00:04:45,839
Speaker 1: it does, it comes quickly, and the markets certainly improved,

83
00:04:45,960 --> 00:04:48,240
Speaker 1: so I think we can all weather through this storm.

84
00:04:48,440 --> 00:04:52,320
Speaker 1: And right now, companies are focused on taking this time

85
00:04:52,440 --> 00:04:55,960
Speaker 1: to be focused on the business, focused on their fundamentals,

86
00:04:56,520 --> 00:04:59,920
Speaker 1: shoring up and preparing to go public, which is looking

87
00:05:00,000 --> 00:05:04,120
Speaker 1: at their talent and taking um, taking um the advantage

88
00:05:04,200 --> 00:05:06,880
Speaker 1: of the market right now to really attract you know,

89
00:05:06,960 --> 00:05:09,960
Speaker 1: strong talent and improve business performance. Did you think it's

90
00:05:10,000 --> 00:05:13,040
Speaker 1: a lower interest rate environment sort of a prerequisite to

91
00:05:13,120 --> 00:05:15,160
Speaker 1: get I p o s to market? Uh? You know,

92
00:05:15,320 --> 00:05:18,160
Speaker 1: is it just get those animal spirits going again when

93
00:05:18,240 --> 00:05:22,760
Speaker 1: money is cheaper. We don't think that low interest rates

94
00:05:22,960 --> 00:05:25,680
Speaker 1: that we've experienced, you know, for for a number of

95
00:05:25,800 --> 00:05:28,520
Speaker 1: years is a necessity. I think what we need is

96
00:05:28,720 --> 00:05:33,040
Speaker 1: just um. We need the interest rates just to level out.

97
00:05:33,120 --> 00:05:37,600
Speaker 1: We need a level of um predictability. But we've had

98
00:05:37,720 --> 00:05:40,159
Speaker 1: I p o s in high interest rate environments before,

99
00:05:40,279 --> 00:05:43,840
Speaker 1: so interest rates coming down to what we've been experiencing

100
00:05:43,920 --> 00:05:47,000
Speaker 1: close to zero is not a necessity, Rachel. One of

101
00:05:47,040 --> 00:05:50,800
Speaker 1: the drivers historically for initial public offerings has been, uh,

102
00:05:51,080 --> 00:05:53,360
Speaker 1: you know, the private equity business. They're bringing some of

103
00:05:53,400 --> 00:05:56,840
Speaker 1: their portfolio companies public. Do we have any kind of

104
00:05:56,920 --> 00:06:00,960
Speaker 1: information on maybe the backlog there will private equity sponsored

105
00:06:01,000 --> 00:06:03,840
Speaker 1: companies be a source of IPO activity when the market

106
00:06:03,920 --> 00:06:07,880
Speaker 1: does come back, certainly, UM, We definitely expect when the

107
00:06:07,960 --> 00:06:12,040
Speaker 1: market starts to reopen, PE will be a strong UM

108
00:06:12,200 --> 00:06:16,080
Speaker 1: influencer of those companies coming to market. Right now, PE

109
00:06:16,279 --> 00:06:19,000
Speaker 1: is being cautious where with where they put their investments

110
00:06:19,240 --> 00:06:22,960
Speaker 1: UM today, and we're seeing them place more investments into

111
00:06:23,000 --> 00:06:27,680
Speaker 1: their current portfolios UM and helping those portfolio companies really

112
00:06:28,040 --> 00:06:32,560
Speaker 1: prepare UM be you know, improve their strength and viability

113
00:06:32,720 --> 00:06:36,400
Speaker 1: through you know these you know, you know, unpredictable times

114
00:06:36,440 --> 00:06:39,200
Speaker 1: that everybody's facing right now, you know. H I wonder

115
00:06:39,400 --> 00:06:42,920
Speaker 1: geographically if there were any areas of the country that

116
00:06:43,040 --> 00:06:45,120
Speaker 1: were hit harder in this slowdown in I p O

117
00:06:45,200 --> 00:06:50,800
Speaker 1: s than others geographically UM hard to say, particularly across

118
00:06:50,839 --> 00:06:53,559
Speaker 1: the US if that's your focus, but certainly the text

119
00:06:53,600 --> 00:06:56,840
Speaker 1: sector overall. So then you could say the West Coast

120
00:06:57,040 --> 00:06:59,880
Speaker 1: UM has been you know hit in and outside me

121
00:07:00,000 --> 00:07:02,120
Speaker 1: and are a lot of that is really when you

122
00:07:02,160 --> 00:07:05,560
Speaker 1: think about those who went public in one and their

123
00:07:05,640 --> 00:07:10,600
Speaker 1: performance today currently trailing well below the market UM, does

124
00:07:10,640 --> 00:07:12,920
Speaker 1: not bode well for the tech sector, and so that's

125
00:07:12,960 --> 00:07:15,920
Speaker 1: been impacting certainly that West coast. Yeah, and I kind

126
00:07:15,960 --> 00:07:18,240
Speaker 1: of follow up on that a little bit. I mean,

127
00:07:18,480 --> 00:07:20,760
Speaker 1: there was a call to be made over to last

128
00:07:20,880 --> 00:07:22,960
Speaker 1: I don't know, really a dozen years. There's so much

129
00:07:23,040 --> 00:07:25,920
Speaker 1: venture capital money out there, so much private equity money

130
00:07:25,960 --> 00:07:29,440
Speaker 1: out there, that a company really didn't need to come public,

131
00:07:29,560 --> 00:07:31,320
Speaker 1: or did need to come public as soon as maybe

132
00:07:31,360 --> 00:07:34,120
Speaker 1: it historically did, it could wait a little bit. Is

133
00:07:34,200 --> 00:07:37,280
Speaker 1: that still the case, or is some of that VC

134
00:07:37,440 --> 00:07:40,560
Speaker 1: money and PE money kind of I don't know. Pulling back,

135
00:07:40,680 --> 00:07:44,960
Speaker 1: maybe I would say there's certainly a lot of dry

136
00:07:45,000 --> 00:07:48,240
Speaker 1: powder still out there with PE and VC. They're they're

137
00:07:48,280 --> 00:07:51,600
Speaker 1: definitely being more cautious in how they put that money

138
00:07:51,680 --> 00:07:56,000
Speaker 1: to work. We'll see how UM that trend continues throughout

139
00:07:56,800 --> 00:08:00,400
Speaker 1: three But they're proceeding in making investments cause just Lee

140
00:08:00,640 --> 00:08:05,680
Speaker 1: and UM, you know, carefully reviewing UM. What they're looking

141
00:08:05,800 --> 00:08:09,360
Speaker 1: to invest in. E S G is a prime topic

142
00:08:09,600 --> 00:08:11,720
Speaker 1: that UM a lot of that. We're seeing an increased

143
00:08:11,760 --> 00:08:15,920
Speaker 1: focused UM from PE in particular through due diligence and

144
00:08:16,160 --> 00:08:20,520
Speaker 1: so forth. But I definitely think PE and BC will

145
00:08:21,000 --> 00:08:24,920
Speaker 1: continue putting their funds to work UM and that will

146
00:08:25,000 --> 00:08:30,040
Speaker 1: always provide companies, you know, opportunity for additional capital. But

147
00:08:30,600 --> 00:08:33,720
Speaker 1: with rising rates the cost of debt, that's certainly going

148
00:08:33,800 --> 00:08:37,920
Speaker 1: to impact PE and VC. So that's where the math

149
00:08:38,040 --> 00:08:40,000
Speaker 1: and the I p O math may start to work,

150
00:08:40,200 --> 00:08:42,880
Speaker 1: may not for certain companies who just need the capital.

151
00:08:43,320 --> 00:08:45,800
Speaker 1: All right, Rachel, good stuff, will really appreciate it. Rachel Garring,

152
00:08:46,240 --> 00:08:48,600
Speaker 1: I p O leader for e Y America's joining us

153
00:08:48,679 --> 00:08:52,280
Speaker 1: via zoom from Nashville, Tennessee. And I'll read that data again.

154
00:08:52,400 --> 00:08:54,000
Speaker 1: I mean, I don't think I've ever seen that. E

155
00:08:54,200 --> 00:08:56,880
Speaker 1: Y recently released its quarterly IPO data report, which shows

156
00:08:57,240 --> 00:09:01,200
Speaker 1: overall deal proceeds drop nine and you get the numbers here,

157
00:09:01,240 --> 00:09:04,800
Speaker 1: A hundred fifty five billion last year, nine billion years.

158
00:09:05,160 --> 00:09:07,040
Speaker 1: Go figure man. I will say, though, Paul, you know,

159
00:09:07,160 --> 00:09:09,600
Speaker 1: and listeners on the radio can't see this. But Rachel

160
00:09:09,640 --> 00:09:12,040
Speaker 1: has the most festive zoom background. Is it's very good.

161
00:09:13,800 --> 00:09:16,440
Speaker 1: Good to see her holiday spirits not been impacted. Rachel.

162
00:09:16,480 --> 00:09:19,480
Speaker 1: Gearing from e Y America is good stuff. They're looking

163
00:09:19,520 --> 00:09:22,199
Speaker 1: at these markets again. We closed higher today, you know,

164
00:09:22,280 --> 00:09:24,160
Speaker 1: we'll take that. I mean it was a week and

165
00:09:24,720 --> 00:09:27,080
Speaker 1: it's good for a Friday. We've got Christmas eve Eve

166
00:09:27,520 --> 00:09:29,959
Speaker 1: and we'll come back. We'll finish out the year next week,

167
00:09:29,960 --> 00:09:31,839
Speaker 1: and then we'll start off a new year, hopefully a

168
00:09:32,000 --> 00:09:35,599
Speaker 1: better year for equity and fixing the markets. This is

169
00:09:35,640 --> 00:09:36,120
Speaker 1: Bloomberg