US IPOs buoyed by world’s largest sovereign wealth fund
Norway’s oil and gas is helping to fuel the nascent recovery in US initial public offerings.
Norges Bank Investment Management, the country’s $1.4 trillion wealth fund, was among three cornerstone investors touted by German sandal maker Birkenstock Holding Ltd. on Monday as it kicked off its $1.6 billion IPO roadshow. Together, these investors offered to buy at least 40% of the offering.
That came just weeks after NBIM, which is responsible for managing Norway’s fossil fuel riches, and four other investors said they’d snap up as much as $400 million of Instacart’s IPO, or roughly 61% of the deal.
It’s part of a growing trend in the US, where cornerstone investors have historically been a less common feature on listings than in Asia and Europe. But with the world’s deepest equity market only just waking up from a prolonged period of inactivity, listing hopefuls are seeking comfort that a large portion of their stock already has reputable buyers lined up.
“While we are beginning to emerge from a challenging IPO market, the cornerstone process continues to be seen as a useful way of derisking the pricing and execution of IPOs,” said Brad Miller, Americas head of ECM at UBS Group AG.
Including Birkenstock, six of the year’s 10 biggest US IPOs leaned on cornerstone investors. Ten tech companies signed up to invest as much as $735 million in the landmark IPO of chip designer Arm Holdings Plc last month. Such early votes of confidence can help drum up interest in a listing: both Arm and Instacart ended up pricing their offerings at the top end of marketed ranges.
There are added benefits for the cornerstones, which get early access to company management, as well as the chance to receive a larger allocation, according to
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