Wall Street investment bankers are optimistic about the prospects for dealmaking, citing a recent uptick in initial public offerings (IPOs) as a sign of a broader recovery.
Goldman Sachs CEO David Solomon told Reuters that the optimism that the U.S. economy will avoid a recession is prompting capital markets to reopen. He noted that Goldman was involved in most of the recent IPOs, which he described as “meaningful” and “going well.”
SoftBank Group Corp’s Arm Holdings, a British chip designer, is expected to price its IPO at the top or above its range of $47 to $51 per share on Wednesday. The deal is the biggest U.S. stock market debut in two years. Grocery delivery service Instacart is also planning to list its shares.
Barclays CEO C.S. Venkatakrishnan said there is “activity under the surface” in the dealmaking market, but that some conditions need to be met before deals can be reactivated, such as stable market conditions, availability of financing, and attractive asset prices.
Morgan Stanley’s head of investment management Dan Simkowitz said he foresaw a “meaningfully better” environment for deals next year, citing an improvement in capital markets spurred by a rising number of IPO and mergers and acquisitions announcements.
Bank of America expects investment banking fees to drop as much as 35% in the third quarter across the industry, but BofA will probably fare better than that, its finance chief Alastair Borthwick said on Monday.
The dealmaking slowdown had prompted thousands of layoffs at investment banks, including at Morgan Stanley, Goldman Sachs, and Citigroup in recent months.
However, the recent uptick in IPO activity has raised hopes that the dealmaking market is starting to recover. If this trend continues, it could lead to more investment banking jobs being created in the coming months.
The initial public offering (IPO) market is showing signs of life, with a number of high-profile deals expected to hit the market in the coming months.
The optimism that the U.S. economy will avoid a recession is prompting capital markets to reopen, and IPOs are seen as a way for companies to raise capital and gain access to a wider pool of investors.
One of the biggest upcoming IPOs is SoftBank Group Corp’s Arm Holdings, a British chip designer. The deal is expected to price at the top or above its range of $47 to $51 per share on Wednesday. The deal is the biggest U.S. stock market debut in two years.
Grocery delivery service Instacart is also planning to list its shares. The company is reportedly seeking a valuation of around $30 billion.
Other companies that are rumored to be considering IPOs include electric vehicle maker Lucid Motors, fintech company Stripe, and social media platform Discord.
The recent uptick in IPO activity has raised hopes that the dealmaking market is starting to recover. If this trend continues, it could lead to more investment banking jobs being created in the coming months.
However, there are still some challenges facing the IPO market. Rising interest rates could make it more expensive for companies to raise capital, and the ongoing war in Ukraine could create uncertainty in the markets.
Overall, the IPO market is showing signs of improvement. However, it is still too early to say whether the recovery will be sustained.
Here are some of the factors that could drive IPO activity in the coming months:
- The overall health of the economy. If the economy continues to grow, it will create more opportunities for businesses to raise capital through IPOs.
- The performance of the stock market. A strong stock market will make it more attractive for companies to go public.
- The interest rate environment. Low interest rates make it cheaper for companies to raise capital through IPOs.
- The regulatory environment. A favorable regulatory environment will make it easier for companies to go public.
If these factors remain favorable, the IPO market could see a significant recovery in the coming months
Shayne Heffernan
