IPO Market Gearing Up for Late 2015 Run

The IPO market is getting ready for a late 2015 run.

Five deals from higher-tier underwriters are on the schedule for next week and two other deals have already been slated for the Week of October 5th. Please refer to the home page for a look at all IPOs and Secondary’s currently on the schedule.

After a slow August for the IPO market, it could be that the FED decision was a main factor in re-opening the door for new issues. Despite the volatility since Janet Yellen spoke last Thursday, lower interest rates usually equates to stability in the stock market. As it pertains to the IPO market, look at First Data (Nasdaq: FDC), who is heavily rumored as to be updating terms in the near future.  The impact of the FED decision to not raise rates helps companies with steep debt loads:

In First Data’s case it pays to raise money while rates are low because the company has a steep debt load. It will use some of the money raised in its stock offering to pay off that debt, so it makes sense to pay it off or refinance it as soon as possible, before rates do rise.

Also, some investors could be scared off by such debt when rates eventually do rise, so it makes sense to sell them stock while rates are still low.

Volatility in the market also is a cause for hesitation. A public company is evaluated daily by shareholders via its stock price. With global growth fears and a market selloff in late August, some companies may determine that the grass is currently not greener on the other, public side.

Tech stocks…especially ones of the “Unicorn” variety –are those that sit on their hands in this period of uncertainty.  Not to mention high-flying, tech names like Alibaba (NYSE: BABA) and GoPro (Nasdaq: GPRO) are considerably down since going public in 2014.  Additionally, FitBit (NYSE: FIT), while up considerably, experiences 10-percent moves in the market on a near weekly basis.

The IPO market is on its way back and we expect a healthy end-of-year run of new issues to close out 2015.