BMO Capital Markets expects IPOs to generate up to US$50bn next year, driven by larger, well-known firms
The US initial public offering (IPO) market is expected to accelerate next year, potentially reaching its highest volume in four years, according to BMO Capital Markets.
In a report by BNN Bloomberg, Eric Benedict, co-head of global equity capital markets at BMO, estimates that companies selling shares for the first time in the US could generate between US$40bn and US$50bn in proceeds.
This marks at least a 32 percent increase compared to this year’s numbers, which excluded blank check firms and included only companies that raised more than US$20m. This projected growth would be the largest since the 2021 pandemic boom, as shown by Bloomberg data.
Benedict, joined by Warren Estey, head of investment banking at BMO, explained in an interview at their New York office that the market is entering a unique phase.
Benedict expects to see an acceleration in issuance starting in the first quarter of next year, continuing through at least the first half of 2026.
However, the market will remain divided between companies with strong sales growth and solid industry backing, and those facing greater difficulties going public.
Globally, IPO activity has been subdued for the past three years, with the US market only beginning to rebound as the Federal Reserve's shift to rate cutting increases risk appetites.
Larger IPO deals with more recognizable companies have outperformed smaller peers.
Data from Bloomberg shows that, as of October 22, the 18 companies that raised over US$500m on US exchanges saw their shares rise by 38 percent collectively, compared to a 17 percent gain for those raising between US$100m and US$500m.
Benedict noted that while bigger deals typically face challenges due to the larger sums of money required, the current trend is the opposite, which he considers to be a positive development.
One significant IPO being closely watched by the market is Ingram Micro Holding Corp., which aims to raise as much as US$427.8m. Its performance will be monitored by private equity firms sitting on nearly US$3tn in unsold assets.
Estey added that the growing appetite for IPOs will help drive companies to go public, particularly as IPOs serve as the only exit for some private equity holdings that are too large to sell to peers.
Expectations of continued rate cuts by the Federal Reserve are also expected to boost banking activity.
BMO’s projection for next year aligns with the pre-pandemic average, when IPO proceeds typically reached around US$56bn annually, according to Bloomberg’s data, which excludes small offerings.
Estey remarked that markets appear to be returning to ten-year averages across various products.
