Wall Street’s frozen IPO market is thawing as companies take advantage of stock rally

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Wall Street just pulled off its biggest IPO in four months, giving bankers hope that the market for newly-listed company shares is stirring to life.

The solar technology firm Nextracker raised $638 million by selling about 15% more shares than expected, sources told CNBC Wednesday.

The listing, which began trading Thursday, shows that the stock market's rebound this year is reviving appetite for new companies from mutual fund and hedge fund managers, said Michael Wise, JPMorgan Chase's vice chairman for equity capital markets. Nextracker shares were up 25% in midday trading.

Wall Street's so-called IPO window, which allows companies to readily tap investors for new stock, has been mostly shut for the past year. Proceeds from public listings plunged 94% last year to the lowest level since 1990 as the Federal Reserve raised interest rates. The upheaval removed a key generator of fees for investment banks in 2022, leading to industrywide layoffs, and forced private companies to cut workers in a bid to «extend their runway.»

Private companies extend their runway by stretching budgets — usually by cutting expenses, like employees— to avoid raising capital or going public until market conditions improve.

«The window seems like it's cracked open right now,» Wise told CNBC in a phone interview. «The strong market performance since the beginning of this year has investors and issuers back and engaged; many companies are now going through pre-IPO, testing-the-waters processes.»

On the heels of the Nextracker listing, other renewable energy firms are planning to list in the U.S., including Tel Aviv-based Enlight, according to bankers. New York-based JPMorgan is lead advisor on both of those deals.

Morgan Stanley is