as we enter late August trade, we're seeing SpaceX hovering just above its IPO price of $135 a share, but developments last week showing that mega launches aren't slowing down and anthropic is rushing to be open AI go public first with an expected listing coming this fall.
But opening leadership is concerned, sticking to its plans to be sometime later this year and potentially in the new year.
Meanwhile, it's a big week for the New York Stock Exchange and its reach across the country.
Tomorrow Puerto Rico's governor will become the first US territory governor to ring the opening bell and on Thursday will be on the ground in Dallas for a celebration of NYSC Texas exchange while joining us as we kick off the trading week is Jim Neeson, managing partner and founding executive at the Connor Group.
Great to have you back.
Thank you so much for joining me.
Remy, thank you so much.
Wonderful to see you.
Yeah, and it's hard to believe, but here we are heading into the fall months give us your perspective on where we stand in the IPO market.
Yeah, you know, I kind of call it that progress report.
I think we're ready to sort of put it out there.
So if you look at IPO volume this year, we've had 232 IPOs, about a 4% increase versus last year.
I'm going to give that a C, right?
It's kind of below expectations of what we thought was going to happen in the beginning of the year.
If you actually look at IPO proceeds, we're over 210% versus last year, and that's taking out SpaceX.
I'm going to give that minus big numbers, but it was selective in terms of where it actually went.
Now trading performance is the big one.
I'm going to give that a C, and that is only 55% of the IPOs that went out this year are actually trading above their IPO price.
You put it together, it's kind of a minus.
If I'm a parent, I'm sort of glad for the effort, but maybe sort of feeling a little disappointed in terms of the results.
Yes, and Jim, I really like the way that you broke everything down, especially given the fact that it is back to school season.
So I think this progress report is very helpful.
But of course we are looking at year end and some big.
Mega IPOs that are coming down the pike, of course anthropic as well as open AI, and this does come on the heels of SpaceX.
So give us your take on expectations.
Yes, you know, I think expectations are feeling optimistic out there.
You have some of these big deals and they're going to be bellwethers for the AI and AI adjacent type of companies, but there's also a lot of other industries that really have companies in the on deck circle.
Healthcare, biotech is the big winner this year.
It is unbelievable.
It's the number one industry in terms of IPOs.
And 70% of the biotech IPOs are actually trading above their IPO price.
There are so many companies we have not heard of in the healthcare biotech that are coming through.
AI, AI adjacent, defense tech in aerospace is really big.
There's also a great crop of companies in financial services, B2B, B2C, energy materials that have been sort of waiting for a while, you know, looking for the right conditions, looking for the right numbers and story.
I think those are going to be not only in the back half of 26, but also that first.
27.
Yes, and when we're talking about expected IPOs, I think it's really important to understand valuation hype versus the reality out there.
And you mentioned a lot of sectors that you're paying attention to, Jim.
So tell us about those key companies that most of us may not have even heard of.
Yes, you know, so we mentioned some of the ones that are the expected ones.
I think Xi is an interesting one that's coming out of Asia.
You have an Android in the defense tech space.
You have a perplexity AI.
You have a Spring Health and Life Sciences.
You have a lot of companies, I think, that are sort of canva, Cohere, liquid Death.
You look at the top 10 list and the list can even change, but I think the idea is that a lot of companies have been private.
I'll mention there are 70,000 private venture capital and VC backed companies out there worth over $4.5 trillion.
So it is an unbelievable pipeline.
And then the ones that sort of are the cream of the crop.
That filtered the top, those are the ones we're going to be talking about.
And you mentioned some household names there, but when we're talking about the reality of going public out there, you've been entrenched in the space for many, many years.
So what are some non-negotiables and key metrics when it comes to debuts?
Yes, I mean you mentioned, so we've done 275 IPOs worth $4 trillion and there are definitely some ingredients that make you attractive to the public markets.
Revenue is obviously a big one.
Revenue growth, typically earnings, right.
A profitable company, a story that the street can understand, multi-generation products, not just sort of the first one, but sort of what is 2nd and 3rd.
How are you going to use those proceeds?
What is that working capital for?
And I think a big one that we're seeing this year is that you're deploying the money to growth in the business, not necessarily to create liquidity for investors or just to sort of clear out some debt.
I think there's definitely some attributes you want a story that people can understand and we talk about retail.
Investors, ones that they can really embrace.
It's a lot of sort of jargon and sort of business speak.
Sometimes it doesn't resonate.
Yes, and speaking of which, there are many different ways of going public nowadays.
So when we break it down, tell us what's happening with SAs versus private equity backed IPOs.
Yes, yes, so I would say there's sort of three key paths that many companies go down.
I call it sort of the traditional IPO path.
You also have the SPA path and then a reverse merger.
And so those are all three that a lot of our clients are really thinking about.
We have 117 companies right now targeting sort of the next 1 to 2 year window, and that's the discussion is can I do dual track and tri-track.
And then the last one is M&A as well.
So I think that's often on the plate, but companies try to figure out if you're getting the banker attention.
Traditional IPO is actually what is the preferred path.
It's the one that creates more brand, more buzz for your company.
But a lot of times you're looking for liquidity or you're looking for maybe a piper.
Raise Capital.
Sometimes that sort of or DSAC and reverse merger could be a viable option.
Yes, and Jim, finally, before I let you go, we're kicking off a very eventful week for the markets here and tomorrow we're paying attention to the opening bell.
So less than 24 hours from now we will have Puerto Rico's governor ringing the opening bell.
So tell us why this is such a key milestone and from where you sit, why do you think this is so meaningful for how Wall Street views the island's economy?
Yes, absolutely.
I mean it's really a signal that Puerto Rico is open for business.
If you remember 10 years ago there was a major hurricane that went through, and that infrastructure and really the economy has been built over the past 10 years.
It's sort of a coming out party for capital, for investments.
You have a Four Seasons that's down there now.
Tourism is up 14%, more than any other state in the US, so really you have a lot of people that are sort of coming into Puerto Rico.
The last comment is Puerto Rico is the number one tax jurisdiction.
In the United States, the most attractive for a retail investor, and a retail investor, it's not what you earn, it's what you keep.
So you see a lot of people who are really looking at Puerto Rico as a place to live.
I made that 5 years ago.
I live down there now and I love it.
Yes, and last but not least, before I let you go, because you highlighted some of the benefits of living in Puerto Rico beyond the tax benefits, tell us what you're seeing when it comes to private capital and what do you think needs to happen when it comes to the long term development.
Puerto Rico, you know, I think so in terms of private capital, you see a huge influx coming in because it's hedge funds, it's different sort of type of investors, but you even see companies coming in.
The pharmaceutical industry has massive manufacturing in Puerto Rico that they've had for many years, which then all of a sudden starts to create intellectual property.
You have a tremendous educated base of people as well who often were trained in universities in the US who are now living in Puerto Rico.
I think a big piece.
Of it is a lot of that sort of compounding effect.
You see it in your investment account as well that way as you see sort of businesses and industry starting to have success, then all of a sudden it makes for a place where you know people love to go and see.
But not only that, it's great for investments and it's great for sort of growing your retail account.
Well, the countdown is on to tomorrow's opening bell, so I appreciate you joining us ahead of that bell and as always, thank you so much for weighing in on what's happening when it comes to IPOs.
Thank you so much.
Thank you so much, Jim.
