Anthropic Stands Alone as Rest of IPO Market Slows to a Crawl
A cocktail of risks is threatening to stall the US IPO pipeline, leaving Anthropic PBC’s potential blockbuster debut as one of the few offerings that investors can count on.
Several deals have already come unglued, with smart-ring maker Oura Inc. and Bamboo Insurance Services Inc. postponing their plans as interest rates climbed higher and the Iran war dragged on. High-profile candidates SB Energy Inc. and Nscale Ltd. have filed publicly but haven’t yet started formal marketing, further muddying the fourth quarter outlook.
Even with some deals falling by the wayside, equity capital markets bankers will be celebrating one of their best years ever for fees. Anthropic is seeking to match or exceed SpaceX’s record-setting debut as soon as next month, in a listing that would dwarf all of the other potential deals combined.
Bankers concede that marketing IPOs has become much harder due to factors including the upcoming midterm elections, and investors are more choosy.
“This is the first time this year that there has been a bit of a pause in the IPO market where folks are saying, ‘There’s got to be a little bit of differentiation in terms of how we evaluate what we buy and at what price’,” said Aloke Gupte, Citigroup Inc.’s co-head of global equity capital markets.
Tricky Calendar
It doesn’t help that the end-of-year calendar is trickier than normal due to the Nov. 3 midterm US elections, where AI safety and data centers have become part of policy debates.
“When you look at the US political landscape and geopolitics overall, the number of unknowns has gone up over the past six weeks alone,” said David Bauer, JPMorgan Chase & Co.’s head of equity capital markets for North America. “That increase in uncertainty inevitably has an impact on how the market is going to behave.”
A warning for the market sounded in September, with IPO activity slowing as US 10-year bond yields jumped more than 50 basis points. Only five sizable companies went public, raising $1.9 billion, according to data compiled by Bloomberg, making it the slowest month since March.
That’s in stark contrast with the picture for the year to date, bolstered by SpaceX and South Korean memory chipmaker SK Hynix Inc.’s listings.
Companies have raised $163 billion in US IPOs this year, or more than three times last year’s haul, according to data compiled by Bloomberg that excludes listings by blank-check firms and other investment vehicles.
The action in the final quarter of the year may be concentrated in one deal.
“In the midst of the best year for IPOs in a long time, it’ll likely be a very quiet two months for the broader IPO market, even with the possibility of a marquee deal coming to market,” said J.D. Moriarty, vice chairman and global head of technology ECM at Bank of America Corp.
“At the moment, investors are more focused on what they own than what bankers want to show them.”
Valuation Middle Ground
Most bankers remain optimistic that investors and companies can find a middle ground on valuation, despite expectations being challenged by the AI selloff in recent days.
Even as 7 of the year’s 10 largest US deals trade below their IPO prices, SpaceX’s resilient performance isn’t lost on portfolio managers, not to mention the implications if a big deal like Anthropic’s delivers similar gains.
“There is as much interest overall in IPOs as there has been. Anything we see going on is a bit temporal and mark-to market,” said John Kolz, Barclays Plc’s global head of ECM.
“The same people saying that IPO performance has not been great are still asking what do you have coming,” Kolz added.
Companies with live IPO filings are keeping their options open, after several outbreaks of volatility this year that faded almost as rapidly as they arrived.
“Even if a company decides to move their timeline into early 2027, they won’t go pens down for the rest of the year,” said JPMorgan’s Bauer. “They’re still engaging with investors, still talking about ways to refine the equity story. They’re staying ready. People will move quickly when the opportunity opens back up.”
To some, all the IPO market needs to regain momentum is a win or two, and that could yet come from sectors not as exposed to the AI theme.
“It would help to have some degree of diversity, but we just need a few regular-way IPOs to price and trade well,” said Rob Stowe, Barclays’ head of Americas ECM. “That will get things moving in the right direction.”
Photo: The Anthropic logo on a laptop. Photographer: Gabby Jones/Bloomberg