There Are Two Major IPOS Coming Up That May Help Jumpstart the Market

Despite the recent record highs in the S&P 500 and the Dow Jones Industrial Average, the initial public offering (IPO) market remains sluggish. However, there are two significant IPOs on the horizon that could potentially breathe some life into the market.

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The first anticipated IPO is from Cerebras Systems, a semiconductor company specializing in chips designed for artificial intelligence applications. Cerebras is expected to go public soon, with plans to raise between $750 million and $1 billion. If successful, this could make it one of the larger IPOs of the year. Cerebras Systems' focus on AI-optimized semiconductors positions it in a rapidly growing and highly competitive field, which has attracted substantial attention from investors in recent years.

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The second notable deal involves StandardAero, a company that provides aircraft maintenance services. On Friday, StandardAero increased the size of its IPO offering, with the company now slated to begin trading on the New York Stock Exchange on October 2. StandardAero is known for servicing major original equipment manufacturers, including GE Aerospace, Pratt & Whitney, Rolls-Royce, Honeywell, and Safran, making it a key player in the aviation services industry.

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The company is planning to offer 60 million shares, with a price range between $20 and $23 per share. This is an increase from its previous filing, which aimed to sell 46.5 million shares within the same price range. At the midpoint of the range, StandardAero’s IPO could raise approximately $1.3 billion, making it one of the largest IPOs of the year.

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If successful, the StandardAero IPO would be the fourth-largest of 2024, trailing only Lineage, a real estate investment trust specializing in temperature-controlled warehouses, which raised $4.4 billion; Viking, a cruise line company, which raised $1.5 billion; and Amer Sports, which brought in $1.37 billion. For comparison, most IPOs in the U.S. typically raise between $100 million and $500 million, so StandardAero’s offering would be notably large in this context.

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To put things into perspective, while there have been over 100 IPOs this year, only four have managed to raise $1 billion or more. The StandardAero deal is being supported by major investment firm Carlyle, with Singapore's sovereign wealth fund, GIC, also participating as a key backer. Both Carlyle and GIC will be selling shares as part of the offering.

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Despite the excitement surrounding these upcoming IPOs, the overall IPO market in 2024 remains underwhelming when compared to historical standards. Although the number of IPOs this year is higher than last year, the total amount raised is still significantly below typical levels.

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As of now, 104 IPOs in 2024 have collectively raised $24.7 billion. In a normal year, IPO proceeds would range from $50 billion to $60 billion, so this year’s total is still far below the historical average. This marks the third consecutive year of below-par IPO activity, highlighting the challenges the market has faced.

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Here’s a snapshot of 2024’s IPO statistics:

• Number of IPOs: 104
• Total raised: $24.7 billion
• Typical year: $50 billion to $60 billion in proceeds

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Despite this underperformance, there is optimism for the future of the IPO market. Several companies are being closely watched as potential candidates for upcoming offerings. Among them is KinderCare, a childcare provider, and Solera, a company that operates a digital health marketplace. Both are expected to raise $500 million or more if they proceed with their IPO plans.

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Additionally, Moove, a lubricant company, is also seen as a potential candidate for an IPO. There are other high-profile companies that may join the IPO pipeline, including StubHub, a leading online ticket marketplace; SeatGeek, another ticket platform; and Ingram Micro, a global provider of supply chain and technology solutions. Dunkin’ Brands-owner Inspire Brands, which operates a range of fast-food chains, is also a possible IPO candidate.

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While the IPO market is not currently operating at full speed, these potential offerings, combined with large deals like those from Cerebras Systems and StandardAero, provide some hope that IPO activity could pick up in the coming months. Investors and market watchers are eagerly anticipating whether these high-profile deals will help turn the tide in what has been a relatively slow period for new public listings.

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In conclusion, while the broader stock market has been setting records, the IPO market is still recovering from its recent slowdown. However, with the arrival of larger IPOs like Cerebras Systems and StandardAero, along with several other potential candidates in the pipeline, there is cautious optimism that the market could gain momentum as we head into the final quarter of 2024. Investors will be keeping a close eye on how these companies perform once they debut, as their success could pave the way for more companies to go public in the near future.

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