NDAQ - Ending the drought: Get ready for a big week for the IPO market

2023-06-28 05:29:49 ET

Things are starting to defrost for the IPO market after being frozen for much of the past 18 months. Faced with rising interest rates, investors dumped high-flying growth companies by turning to more profitable alternatives, but as the rotation turns the corner, sentiment is now boiling over to public listings. The recent successful IPO of Mediterranean restaurant chain Cava ( CAVA ) continues to cook up optimism among issuers and bankers, with the stock soaring 107% over its initial pricing in less than two weeks of trading .

On tap: Set to debut this morning is Korean BBQ group GEN Restaurant ( GENK ), which is hoping to replicate the success of Cava. While it's a smaller IPO, there are another four listings this week that are set to raise over $300M each. The largest is Vesta Real Estate ( VTMX ), which develops and manages industrial properties in Mexico, but SA Investing Group Leader Donovan Jones is cautious about the company given the history of depreciation of the peso against the dollar. Other big deals to watch are Kodiak Gas Services ( KGS ), a natural gas compression outfit based in Texas, as well as for-profit thrift store operator Savers Value Village ( SVV ) and specialist insurer and reinsurer Fidelis ( NYSE: FIHL ).

Another sign of how the market is broadening out is that each of the coming IPOs is from a different sector. Many conversations are also taking place across the exchanges, centering around whether now is the time to gear up and go. "My phone is already ringing," declared NYSE ( ICE ) President Lynn Martin, adding there are plenty of "green shoots." She's also encouraged by signs of demand from institutional investors and noted one particular industry that has had a very positive reception.

Bullish signs: For those looking for exposure to the broader IPO market, the Renaissance IPO ETF ( NYSEARCA: IPO ) has returned 32% this year, compared to the 14% gain of the S&P 500. Renaissance Capital has even counted 46 U.S. IPOs YTD, up 21% from the same period last year, and firms have raised proceeds of $7.6B, up 91% from a year ago. While the Fed has recently suggested it would raise rates two more times 2023, it did opt for a skip during its June meeting and is definitely taking its foot off the accelerator . Investors might also be eager to consider discounts or bargains on new shares, now that a recovery has been seen in many of the beaten-down names on Wall Street.

More on IPOs

• Kodiak Gas Services Pursues $328M IPO Plan
• IPO Update: Savers Value Village Aims For $300M IPO
• Fidelis Insurance Finalizes $298M IPO Plan

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