Wave of $15 Billion US IPOs Runs Headlong Into War’s New Phase

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(Bloomberg) — Investment bankers are hitting the road to raise more than $15 billion across initial public offerings in the coming weeks, nervously eyeing market volatility as a standoff with Iran threatens a fragile ceasefire.

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The success of a string of deals, led this week by a $2.23 billion IPO for ventilation and filtration systems provider Madison Air Solutions Corp., will be closely watched. Bankers are looking to put choppy performance for recent debutants in the rear-view mirror, clearing a path for the mammoth SpaceX listing expected in June. 

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Wall Street’s push to take at least a dozen companies public in the next few weeks comes as a US blockade of the Strait of Hormuz threatens to upend markets, which haven’t yet appeared to factor in the potential rise in inflation that a lengthy and volatile conflict would bring.

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“There’s no such feeling as an ‘all clear’ in the current geopolitical backdrop,” said John Kolz, global head of equity capital markets at Barclays Plc. “Right now, everybody is a macro person, you have to be and that’s why prepping to get in and out of the market when there’s a semblance of a window is here to stay.”

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A dozen companies have filed their US IPO prospectuses publicly or started marketing deals in the six days since a ceasefire was reached, and five of them are set to price this week. As much as $4.6 billion may be raised by Friday, potentially making it the best week since Medline Inc.’s $7.2 billion deal in December, data compiled by Bloomberg show.

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“These are very scaled, mature businesses, a number of which are private equity-backed,” said Michael Ventura, co-head of US ECM at Royal Bank of Canada. “Sellers have held these assets longer than expected, grown them more significantly than expected, and are now looking at exit valuations that are higher than they expected – it is no surprise they are being active.”

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On Monday, billionaire Bill Ackman kicked off formal marketing for the IPO of his closed-end fund and his hedge fund, and a convenience store operator, a real estate investment trust and a pair of health-care companies also entered the fray. On Friday, a pair of Blackstone Inc.-backed companies filed for IPOs, along with organic juice maker Suja Life Inc., satellite-based signals intelligence provider Hawkeye 360 Inc. and two other biotech firms.

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Marketing IPOs with an eye on post-listing performance has been tricky this year, even before the current conflict erupted. While the weighted-average return for the class of 2026 IPOs so far has been a 4.6% gain, outpacing a modestly lower S&P 500 Index, half of the 10 largest deals have wiped out more than one-quarter of their value, data compiled by Bloomberg show.

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In a week where investors and geopolitical analysts are on tenterhooks, bankers are using different tools to help shore up the process. 

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As much as one quarter of Madison Air’s targeted share sale has already been spoken for by investors, and the founder intends to buy $100 million of shares at the IPO price, its filings show. The offering was multiple times oversubscribed as of Friday, Bloomberg News reported.