According to IPO research firm Renaissance Capital, over 160 companies are trying to raise over $56 billion via initial public offerings. This is the largest amount of companies seeking IPOs since 2000, and the largest IPO backlog ever in terms of value according to the New York Times.
These aren’t the IPOs of yesteryear either. Many are established firms who left the stock market due to private equity buy-outs during the pre-crisis leveraged-buyout boom, or special situations such as GM, which was rescued by the U.S. government and now seeks to diversify its ownership with public shareholders again.
So it should be a boom time for investment banking… except for the fact that investors’ appetite for stocks isn’t what it used to be.
“We haven’t seen such a large overhang of supply in some time,” said Linda R. Killian, a principal at Renaissance. “The question is whether the market can absorb it all.”
“The stock market has effectively been in a recession since August 2007,” said David J. Goldschmidt, a lawyer at Skadden, Arps, Slate, Meagher & Flom who specialises in capital markets transactions. “And all this volatility and uncertainty makes it difficult to sell equity securities.”
Yet for the few remaining stock investors left in the world, a dearth of demand means cheaper IPO prices, especially for the companies that need to IPO, like GM. So stay tuned.