Nasdaq Sees a Strong IPO Market through Fall
While the COVID-19 pandemic initially disrupted the IPO market, there is now a strong pipeline for initial public offerings through the fall, according to Jeff Thomas, senior vice president and head of Western U.S. Listings and Capital Markets at Nasdaq.
“We expect a very busy June and July. Historically, August has been very slow, but we actually might see some activity then,” Thomas said during an interview on Bloomberg TV. “There is usually a lull right around before the Labor Day holiday, and then I think through September and October, it will continue to be busy.”
Since the onset of the pandemic, Nasdaq has brought 17 companies public, the healthcare sector experiencing the highest number of new offerings.. During the first week of June alone, Nasdaq welcomed three companies: Warner Music Group (WMG), Nikola (NKLA) and ZoomInfo (ZI).
As companies prepare to go public, part of the new normal will be executing their roadshow virtually. Thomas expects virtual engagement with investors to be part of the playbook at least through the end of the year, if not permanently. “This creates a greater emphasis for companies to get engaged with institutional investors earlier in their lifecycle,” he said.
As companies seek to engage with investors in new ways, Nasdaq’s Investor Relations business has been focused on helping companies digitally connect with investors. The pandemic has also prompted increased attention on the shift from shareholder capitalism to stakeholder capitalism. In turn, Nasdaq has been “investing heavily in services and offerings to help companies report their environmental, social and governance disclosures along with their financial disclosures,” Thomas said.
As private companies prepare to raise capital, Thomas said that he has seen “more aggressive terms in fundraising rounds.” That said, the companies that have seen their business pick up during the pandemic, such as cybersecurity companies and companies that enable employees to work from home, have had an easier time fundraising.
“Even some private companies are now starting to provide liquidity to their shareholders,” Thomas continued. “Where we saw the secondary market cool off at the start of the pandemic, we've now started to see activity on Nasdaq Private Market pick up.”
Thomas noted that the companies that went public this year and performed well are ones that “did a great job of staying in touch with investors, educating them on their story and making sure they understand the value that they brought when they came to market.”
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