US companies that went public in September have raised around $7.2 billion, representing 56% of the total capital raised in global initial public offerings (IPOs) during the month. According to market experts, the rebound in market activity could hint at a significant IPO boom in 2024, assuming that interest rates will not keep rising anymore.
Arm, Instacart, and Klavyio Raised $6.5B in September
The US IPO market witnessed notable signs of resurgence in September, turning it into the biggest month for IPO fundraising since January 2022, Bloomberg reported on Wednesday.
Although the companies that accounted for the three biggest market debuts this month – Arm, Instacart, and Klaviyo – faced volatility in the days following their listings, their stocks regained stability more recently. As a result, companies that have been eyeing their IPOs have gained more confidence.
According to Bloomberg’s data, companies that went public on US exchanges secured around $7.2 billion in September, representing roughly 56% of the capital raised in global IPOs this month. Arm’s blockbuster listing accounted for almost $4 of every $10 raised in September, with the company hitting a $65 billion valuation on the first trading day.
Several days later, Instacart went public, with its shares soaring over 40% at the IPO launch day, followed by a sharp drop in the following trading sessions. The stock is down around 11% since its debut, although such short-term volatility is ordinary for big IPOs.
Out of the $7.2 billion raised in US IPOs in September, Arm, Instacart, and Klaviyo bagged $6.5 billion. These figures represent a considerable surge, given that IPOs totaled just $14.2 billion in the first 6 months of 2023.
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‘2024 Could Open the Floodgates’ for the IPO Market If Rates Hold Steady
The resurgence in IPO activity led to a significant change in market sentiment, with some experts now predicting a fundraising frenzy in 2024. However, these predictions heavily rely on expectations that the Federal Reserve will not continue raising rates next year.
“If a stable rate environment persists then 2023 will bring the establishment of a solid IPO market and 2024 could open the floodgates.”
– said Rainmaker Securities managing director Greg Martin
With the $21.4 billion raised in 2023 through September 27, the market is in a completely different mood compared to last year, as investors hope the rade-hiking campaign is close to its end. The VIX Index, a widely-followed measure of the stock market’s expectation of volatility, has held below 20 since March – a critical level for bankers seeking a less volatile equity market for pricing IPOs.
Do you think the projections that the IPO market may thrive in 2024 will likely materialize? Let us know in the comments below.
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