IPOs are getting delayed due to market volatility, threatening IPO surge
Companies out on the road meeting investors to pitch an initial public offering have hit a bump.
At least two planned listings have been delayed due to market volatility. Hear.com, a hearing-aid service provider backed by private equity firm EQT AB, has postponed its listing, which was slated to price on Thursday, according to people with knowledge of the matter, who asked not to be identified discussing confidential information.
Hear.com was planning to raise as much as $324 million, filings show. Representatives for Hear.com and EQT declined to comment.
Genworth Financial Inc. announced Thursday that it’s postponing the IPO of its subsidiary Enact Holdings Inc., citing trading volatility in the mortgage insurance sector. Genworth had planned to raise $542 million, according to earlier filings with the U.S. Securities and Exchange Commission.
“Genworth’s board of directors determined that current market pricing for the planned offering does not accurately reflect Enact’s value,” the company said in a statement.
While U.S. stocks snapped back Thursday, the three-day slide that started the week—prompted by concerns about inflation—was enough to spook companies hoping to make their market debuts. The Chicago Board Options Exchange’s Volatility Index rose to the mid-20s level this week, the highest since March. Bankers usually advise companies to go public when the VIX is below 20.
Amir Schlachet, chief executive officer of Global-E Online Ltd., the e-commerce software provider that pushed ahead with its IPO on Wednesday, said the company had “managed to select a pretty horrible day to go to the public market.”
“It’s very hard to time the exact day,” Schlachet said in an interview. “What really matters is how it trade in three months, six months, one year.”
The turbulence has also impacted other equity issuances, and hit companies that have recently joined the public markets. BRT Apartments Corp. canceled a secondary offering of two million shares, citing volatility. Its stock jumped as much as 15% on the news.
Shares in Bumble Inc., Honest Co., Affirm Holdings Inc. and Coupang Inc., which all went public this year, have each slipped below their IPO prices in recent days.
The pullback could threaten 2021’s booming market for IPOs, which has seen companies raise more than $277 billion globally in the biggest start to a year on record. Much of that activity has come from a rush to launch special purpose acquisition companies, with blank-check listings accounting more more than a third of the market, according to data compiled by Bloomberg. SPAC issuance is already under threat, though, after a crackdown by U.S. regulators on how accounting rules are applied to the shell companies.
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