Will Market Volatility Impact IPOs?

By IPOsFOXBusiness

IPOs on tap for this fall

Frank Maturo, Americas Vice Chairman of Equity Capital Markets at UBS, speaks with FOXBusiness.com’s Katie Roof about the outlook for upcoming IPOs.

The Dow is in midst of its most volatile week in history, as concerns over China continue to shake investor sentiment. With U.S. stocks officially in correction territory, some are wondering if this will prevent companies from going public.

Continue Reading Below

Businesses are more inclined to IPO when stocks are steady or on an upswing, so the fall window will only reopen if everything returns to normalcy.

“The IPO market has run into turbulence,” said Kathleen Smith, principal at IPO ETF (NYSE:IPO) manager Renaissance Capital.  “Year-to-date over half of all IPOs are trading below their offer prices.” Some of the high-profile IPOs from the past year, including Alibaba (NYSE:BABA) and Box (NYSE:BOX), are trading beneath their debut price.

Garvis Toler, Global Head of Capital Markets for NYSE Group, said that while it’s “hard to predict what’s going to happen with the economy over the fall and winter,” the “IPO markets tend to follow the economy.”

Toler and others with insight into upcoming IPOs agree that the pipeline remains strong, with a lot of companies ready to pull the trigger, should market conditions improve.

It “should be a very busy fall,” said Bob McCooey, Senior Vice President of Listing Services at the Nasdaq. We’re “seeing continued filings of pretty large deals.”

While not quite on par with last year’s blockbuster performance, 2015 has been a robust year for U.S. IPOs, with 133 so far this year, according to Dealogic.

Due to a biotechnology boom, the Nasdaq (NASDAQ:NDAQ) has seen the bulk of companies go public, with 90 raising $12 billion. The New York Stock Exchange (NYSE:ICE) brought in larger IPOs, with 42 businesses raising $13.9 billion.

By far the most active sector has been healthcare, accounting for 47 IPOs this year. 24 financial companies went public and technology saw 18.

“It’s been a very strong market for IPOs,” said Frank Maturo, Americas Vice Chairman of Equity Capital Markets at UBS (NYSE:UBS) in a video with FOXBusiness.com. “While the year has been dominated by healthcare, “we are starting to see a lot more consumer retail transactions.”

SoulCycle, Neiman Marcus, Albertsons and Ferrari are all preparing to go public soon. Tech companies like Pure Storage and First Data are also on the radar.

“The IPO market is going to continue to be pretty active,” predicted Maturo.