The IPOX® Update 4/4/24
Strong Outlook for U.S. IPO Market in Q2 2024 Following Large Debuts
The U.S. IPO market is poised for a robust second quarter in 2024, buoyed by debuts from companies like Astera Labs, a Silicon Valley-based data center connectivity solutions provider, and Reddit, the popular American social news aggregation and discussion platform. Several high-profile companies have filed for listings, including Rubrik, a Palo Alto-based cloud data management company, and UL Solutions, an Illinois-based global safety science leader, which together are expected to raise over $1 billion. The 48 IPOs priced in Q1 2024 have gained approximately 25% on a weighted average basis, marking the strongest start to a year since 2019. Potential Q2 IPO candidates span various sectors, including Lineage Logistics, a Michigan-based temperature-controlled logistics solutions provider, Ingram Micro, a California-based global technology and supply chain services company, Novelis, an Atlanta-based world leader in aluminum rolling and recycling, Ibotta, a Colorado-based cash-back rewards platform, Turo, a San Francisco-based peer-to-peer car-sharing marketplace, Marex Group, a London-based global commodities specialist, and Contineum Therapeutics, a Massachusetts-based biotechnology company focusing on curative therapies for genetic diseases - set to debut tomorrow. While IPO activity is anticipated to accelerate in Q2, dealmakers caution against expecting a return to the boom times of 2021, emphasizing the importance of appropriate valuation multiples and investor focus on deal size and float relative to anchor investor absorption. (Source)
Airbus's Aalto HAPS Open to IPO After Launching Commercial Operations
Aalto HAPS, a unit of European aerospace giant Airbus that develops high-altitude pseudo-satellite (HAPS) drones, is considering an IPO after commencing commercial operations. The company's solar-powered Zephyr drones are designed to provide 5G connectivity and Earth observation services from the stratosphere. Aalto HAPS aims to enter commercial service in early 2026 and is actively seeking investors to scale up its business. The company has been collaborating with select customers, including the British Ministry of Defence and partners in Japan and Saudi Arabia. By 2026, Aalto HAPS expects to invest a few hundred million dollars and differentiate itself from satellite-based competitors. The company is establishing a presence in Kenya, Latin America, and Asia, with plans to significantly grow its headcount in the coming years. An IPO could provide the necessary capital for Aalto HAPS to expand its operations and capitalize on the growing demand for high-altitude drone services. (Source)
Saudi Arabia's Riyad Bank Considers IPO for Investment Banking Arm Riyad Capital
Riyad Bank, the third-largest lender in Saudi Arabia, is mulling an IPO for its investment banking unit, Riyad Capital. This move comes amidst strong demand for IPOs in the Gulf region, fueled by high oil prices and increased investor interest. Riyad Capital offers a range of financial services, including asset and wealth management, investment banking, and brokerage services. In 2023, the firm reported a profit of $101 million. The Public Investment Fund, Saudi Arabia's sovereign wealth fund, holds the largest stake in Riyad Bank. An IPO of Riyad Capital could provide the bank with additional capital to expand its investment banking operations and tap into the growing appetite for IPOs in the region. The potential listing would also offer investors an additional opportunity to gain exposure to Saudi Arabia's thriving financial sector. (Source)
Turkish Manufacturer Vestel Considers IPO for Battery Unit Vestel Mobilite
Vestel, a leading Turkish home and professional appliances manufacturer, is exploring the possibility of an IPO for its battery unit, Vestel Mobilite. According to Vestel Group CEO Ergun Guler, the IPO plans are in the early stages and may materialize in the coming years. The company aims to grow Vestel Mobilite into a billion-dollar enterprise within three years. Vestel is well-known for manufacturing televisions under licensed brand names such as Toshiba, Hitachi, Polaroid, and JVC. An IPO for Vestel Mobilite could provide the necessary capital to accelerate the unit's growth and establish a strong presence in the rapidly expanding battery market. (Source)
Swedish Landlord SBB's Norwegian Associate Plans Oslo Stock Exchange Listing
Public Property Invest, the Norwegian associate of Swedish landlord SBB, is planning to list on the Oslo Stock Exchange. The IPO is expected to raise between NOK 1.5-2 billion ($141-188 million), with trading anticipated to commence in early Q2 2024. SBB, a Swedish property owner, currently holds a 44.8% stake in Public Property Invest, a Norwegian property owner. Due to rising interest rates, SBB has been selling and spinning out portions of its portfolio to raise cash. As part of this strategy, SBB will sell 13 Norwegian properties to Public Property Invest for NOK 1.19 billion ($112 million), which will be settled with new IPO shares. SBB intends to remain a long-term shareholder but will not subscribe for new shares in the IPO. According to Public Property Invest's interim CEO, the IPO will strengthen the company's balance sheet and improve visibility and market access. (Source)
Peel Hunt's RetailBook Platform Receives FCA Approval for Spin-Off
UK investment bank Peel Hunt's RetailBook platform has received approval from the Financial Conduct Authority (FCA) to spin out and boost retail investor participation in IPOs. RetailBook connects retail investors with IPO opportunities through brokers, and Peel Hunt has raised new funding for the platform. Following FCA approval, RetailBook is set to operate independently from Peel Hunt starting in the first half of the fiscal year 2025. Historically, efforts to increase retail IPO participation have faced challenges, with past initiatives like Cazenove's Wit investment failing to gain traction. Competitor PrimaryBid has shifted its strategy amidst redundancies, while NatWest's retail share offer is currently paused. The spin-off of RetailBook marks a significant step towards improving retail investor access to IPO opportunities in the UK market. (Source)
Europe's IPO Market Not Yet Ready for Unprofitable Tech Firms, Says Bank of America
According to Bank of America, profitability still matters for technology IPOs in Europe, unlike in the United States. The European market has not seen any significant tech IPOs in the past two years, with French software firm Planisware and medical app Doctolib postponing their listings. The head of EU ECM at Bank of America states that several interest rate decreases and sustained global primary market activity are necessary for pre-profit tech IPOs to gain traction in Europe. In contrast, the US market has witnessed large IPOs from unprofitable tech firms like Reddit and Astera Labs, with Rubrik filing for a listing despite reporting losses. Thematics Asset Management, a European investment firm, is not yet prepared to invest in riskier, non-profitable tech strategies in Europe. The divergence between the US and European IPO markets highlights the different investor sentiments and risk appetites in the two regions. (Source)
Geely's Premium EV Brand Zeekr Revives Plans for $500M US IPO
Zeekr, a premium electric vehicle brand owned by Chinese automaker Geely, has restarted its stalled plans to raise up to $500 million in a New York IPO. The company held a non-deal roadshow with potential investors after putting its IPO plans on hold in November due to valuation mismatches and volatile market conditions. Zeekr is proceeding with IPO preparatory work, having filed a prospectus with the Securities and Exchange Commission (SEC) in November. Chinese IPOs in the US have decreased significantly in Q1 2024, with Zeekr's target IPO size reduced from its previous goal of over $1 billion. The company aims to double its deliveries to 230,000 cars in 2024 and previously raised $750 million at a $13 billion valuation in 2022. (Source)
Aerospace Parts Manufacturer Loar Holdings Files for $100M US IPO
Loar Holdings, an aerospace and defense components manufacturer, has filed for a U.S. IPO to list its shares on the New York Stock Exchange under the symbol "LOAR." The company specializes in designing and manufacturing niche components essential for aircraft and has acquired several companies to expand its operations. In 2023, Loar's net sales increased by 33% to $317.5 million, although its net loss widened to $4.62 million. The company plans to raise $100 million through the IPO, with Jefferies, Citigroup, and Morgan Stanley among the underwriters for the offering. A successful IPO would provide Loar Holdings with the necessary capital to fund its growth initiatives and strengthen its position in the aerospace and defense components market. (Source)
