U.S. IPO market faces oversupply problem

NEW YORK, July 30 (Reuters Breakingviews) – The pandemic has disrupted global supply chains. The pipeline for companies going public on the US stock exchanges has its own supply problem: too many of them. Robinhood Markets (HOOD.O) online trading app’s much-vaunted offering fell flat this week, battery maker Clarios International delayed its debut, and Dole lowered its price. Other initial public offerings have done better, but investors can afford to be choosy.

Some 265 active companies have floated into U.S. markets so far this year, already surpassing 2020’s 209 and raising more than $ 100 billion, according to Dealogic, a figure not seen in a full year since the heady days of 1999. to 2000. That doesn’t even include 387 special-purpose acquisition company floats in 2021 – beating the 248 that hit the market last year – appealing to investors for an additional $ 100 billion.

There is still a lot of juice. The first-day average price for non-SPAC offers so far this year is 39%, per Dealogic. Shares of trendy grill maker Traeger (COOK.N), for example, jumped 22% on Thursday.

But at the rapid pace of this year, there is potentially excess inventory. Robinhood, valued at $ 32 billion at its IPO price, fell 8% on its debut Thursday. Engaging retail investors in the initial offering, usually reserved for institutional buyers, may have avoided a distorting rush into the stock on the first day of market-wide trading. Still, the underwriters try to price the shares with room for upfront gains.

Fruit and vegetable supplier Dole slashed the price of its offer on Wednesday. Clarios, the auto battery maker owned by Brookfield Asset Management (BAMa.TO), aimed to raise nearly $ 2 billion in its float, but postponed its IPO on Thursday due to current market conditions. The same goes for Teads, the advertising technology company owned by Altice (ATUS.N).

Several alarm bells are ringing. Some big names, including the Chinese ridesharing app Didi Global (DIDI.N), have had serious problems. Although his Beijing masters have been behind Didi’s 30% drop in shares since its IPO just a month ago, there have been too many China-based applicants seeking listings. in the United States so that investors ignore regulatory crackdown halfway around the world.

More broadly, the Renaissance Capital IPO index, which tracks issues for two years from their floats, is down slightly this year against a gain of nearly 20% on the S&P 500 index. public is no longer obvious.

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NEWS CONTEXT

– Robinhood Markets shares fell 8% to around $ 35 on their first day of listing on July 29, from an initial public offering price of $ 38 set a day earlier.

– Clarios International, a car battery maker owned by Brookfield Asset Management, delayed its initial public offering to July 29 citing “current market conditions”. Advertising technology company Teads, owned by French telecommunications group Altice, has also postponed its IPO.

– Dole reduced the indicative price range of its initial public offering on July 28. The fruit and vegetable producer said it plans to price its shares between $ 16 and $ 17 apiece, compared to the previous range of $ 20 and $ 23 per share. It would be valued at $ 1.7 billion at the top of the new range.

Editing by Lauren Silva Laughlin and Marjorie Backman