Arm’s flotation could revive the market for IPOs
Editor’s note (September 14th 2023): this story was updated on September 14th to take in Arm’s valuation and the date of its IPO. No matter how wild the party, it is a rare hangover that lingers into its second year. Yet after a record-smashing rave in 2021, investors in initial public offerings (IPOs) are still nursing sore heads. Over the course of a year-long binge, they ploughed some $600bn into stockmarket listings around the world in 2021, according to Dealogic, a data firm.
That is more than double the figure for 2007, in the mad gallop preceding the financial crisis, and nearly triple that for 2000, as the dotcom bubble swelled. But then soaring inflation, the end of cheap money and cratering markets put paid to the celebrations. In some places flotations all but disappeared: proceeds from American IPOs in 2022 fell by more than 90% compared with the previous year.
So far in 2023, the sombre mood has continued (see chart). The music may soon start up again. On August 21st Arm, a British chip designer, at last filed a preliminary prospectus for a hotly awaited listing on the Nasdaq exchange, which will take place on September 14th.
Shares in Arm were priced at $51 each, valuing the company at more than $54bn, making its IPO the biggest in America in nearly two years. It is not just Arm. Notwithstanding an August wobble, stockmarkets have been rising for almost a year: the S&P 500 index of large American firms is up by 24% from a trough in October.
MSCI’s broadest index of global stocks has also risen by 24%. Such a bull run offers inevitable temptations to the bosses of private firms. With prices having risen so much, perhaps now is the time to sell a chunk of the company’s shares to public investors and get a
. Read more on livemint.com
