Sentiment for IPO Market in 2025 Continues to Improve
We’re well-positioned with these two holdings as the IPO market heats up.
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We continue to watch the initial public offering (IPO) market as it appears to be heating up again. Our interest stems from our positions in Morgan Stanley MS and Bank of America BAC — and what we saw following the IPOs for Ingram Micro (INGM) and pharmaceutical company Septerna (SEPN) was constructive.
Both IPOs moved nicely higher following their respective pricings indicating there is demand for newly public, well-positioned companies and well-priced stocks. We see that as building support for other offerings, and this year the IPO backlog is sizable.
Adding some additional support, BMO’s co-head of global capital markets, Eric Benedict, said last week the firm sees the U.S. IPO market rising more than 30% in 2025, which should put estimated proceeds between $40 billion-$50 billion next year. The firm also shares our thinking that as the Fed moves down the rate-cut curve, it should foster a rebound in IPO activity. That has us optimistic about investment banking revenue prospects for Morgan Stanley and Bank of America, which were ranked number one and four, respectively for equity offering fees through the first nine months of this year.
Building on those BMO comments, Nasdaq NDAQ CEO Adena Friedman also thinks IPO momentum will rise next year. Part of that optimism is due to a combination of market conditions but also a growing backlog of private equity sales. The thing about private equity companies is that they too need to show returns on their investments by monetizing them usually through either acquisitions or taking them public.
Among the almost 200 future listed IPOs, there are some very high-profile ones expected next year including cloud computing firm CoreWeave Inc., fintech companies Chime Financial and Stripe, as well as buy-now-pay-later company Klarna Bank AB. The lead-up to those and others means we will continue to track near-term IPOs and their post-market performance. The more we see favorable post-market performance, the greater investor appetite for such offerings and the more likely more as well as larger companies will tap the IPO market.
At the time of publication, TheStreet Pro Portfolio was long MS and BAC.
