Anticipated Initial Public Offerings to Monitor
The initial public offering (IPO) market is experiencing a significant resurgence, with a 55% increase in deals compared to 2024. This revival is led by the recovery in the stock market, particularly tech stocks, and still-massive spending by AI hyperscalers. According to Renaissance Capital Director of Investment Strategies Avery Marquez, the IPO market is in a good position, predicting a continuous flow of new issuance through the fourth quarter.
The major U.S. equity indexes are trading at all-time highs, and a total of 143 deals have been priced in the IPO market so far this year. Some of the most notable companies planning IPOs in the second half of 2025 include the German generics company Stada, Swiss Marketplace Group (SMG), Navan (a travel and expense management company), and several spin-offs and subsidiaries from established companies like Continental, Thyssenkrupp's TKMS submarine division, Ottobock, Deutsche Börse's ISS Stoxx, and potentially Tennet Germany.
However, the IPO market's volatility should not be overlooked. The performance of FIG, an online design platform, serves as a reminder of the risks associated with investing in IPOs. FIG experienced a 250% increase in its IPO on its first day of trading in late July, which later shrank to a 66% gain by early September. This volatility can lead to significant gains and losses, making the IPO market a high-risk investment option.
Given the risks involved, a cautious approach is advised for investors when considering IPOs. They should allocate only a small portion (5% to 10%) of their portfolio to high-risk assets like IPOs. The uncertainty surrounding tariffs and inflation could potentially hinder a full-blown pickup in the IPO market.
Softer-than-expected tariff rates have supported the broad risk-on price action, contributing to the optimistic outlook for the IPO market. The total amount raised in the IPO market this year stands at $22.7 billion. Despite the potential risks and volatility, the long-awaited pickup in the IPO market is finally materializing, as more notable names are joining the public pipeline.
Investors should carefully consider the risks associated with IPOs before making any investment decisions. The IPO market's volatility can make it a high-risk investment option, and investors should be prepared for potential fluctuations in the value of their investments. Nonetheless, the resurgence of the IPO market presents opportunities for those willing to take a calculated risk.
