A top banker at JPMorgan Chase said that the initial public offering (IPO) market for companies backed by private equity firms is heating up.
Keith Canton, JPMorgan’s head of Americas equity capital markets, said the market for such companies is “very much open,” as firms seek to lower their debt loads or provide existing investors an opportunity to cash in, Bloomberg reported Wednesday (Oct. 2).
“The deals pricing in the next 10-15 days are largely sponsor-backed assets,” he said in a Tuesday interview with Bloomberg. “That gives us a higher degree of confidence for volumes next year just given the number of high-quality assets that sit within sponsor portfolios.”
Bloomberg noted that four such U.S. listings are set to go public this month, including StandardAero, which provides aircraft maintenance services. StandardAero is backed by Carlyle Group and raised $1.44 billion in a Tuesday IPO.
Canton estimated that a dozen companies could go public on U.S. exchanges in the coming quarter. However, although the IPO market is outpacing last year’s figures, annual proceeds will still likely be 20% to 25% below what the bank considers normal, he told Bloomberg.
“IPOs are working,” Canton said. “Overall, the deals have been performing well, with the larger deals significantly outperforming from a returns standpoint. This presents a strong opportunity for the buyside to deploy capital.”
Canton’s remarks come as more companies weighing IPOs are choosing to wait.
As PYMNTS reported in August, uncertainty in the stock market is holding IPOs back, as well as worries that the economy could grow hectic again, with the outcome of November’s presidential election still undetermined.
In light of the turbulence, companies are waiting to go public.
Philippines-based mobile payments provider GCash said in August it wants to go public, but now is not the time.
“We recognize that the new round of investments further strengthens Mynt’s ability and position coming into an IPO,” said Martha Sazon, CEO of GCash parent Globe Fintech Innovations/Mynt, adding that an IPO “could attract interest from all types of investors wherever stock exchange we list it.”
“However, our view on the timing of the IPO remains the same,” she said. “That is, it’s subject to improvements in market condition.”