The environment for mega-cap companies to go public in the US remains uncertain despite a rebound in IPOs in 2017, due to tumult and high valuations in equity markets. Moreover, investors are cautious after poor showings by two of the most hyped debuts in 2017: those by Snap, whose share price fell more than 5% in a single day in late February after an episode of poor publicity, and meal kit company Blue Apron.
Toppan Vintage, a trusted financial printing and communications company, in partnership with Mergermarket, is pleased to present the newest edition of M&A Pulse newsletter. This newsletter features expert insights on high-dollar transactions, or "megadeals", in 2018.
Toppan Vintage question: What will happen to the number of IPOs by US companies valued at US$4bn or more over the coming year? Leading deal experts weigh in...
Nonetheless, the possibility of offerings by marquee names continues to fuel anticipation in the market. On February 23, cloud storage company Dropbox filed an S-1, announcing it would seek US$500m in an IPO to expand the reach of its subscription business, among other uses. The unicorn company had previously been valued at US$10bn, even though it is not profitable and had revenue of just US$1.11bn in 2017.
Fellow unicorns Lyft (US$11.5bn valuation) and WeWork (US$20bn valuation) are also reportedly considering IPOs in 2018. Meanwhile, Uber (US$68bn valuation) is aiming for a 2019 debut, and Airbnb (US$29.3bn) has put its IPO plans on hold after a management shakeup in early February 2018 left the company without a CFO.
Our survey participants broadly expect more IPOs by US companies valued at US$4bn or more in the next year, with 40% saying there will be 2-4 more such IPOs and 24% saying there will be an increase of five or more.
The current instability in stock prices will cause the pace of large IPOs to slow, according to the director of strategy and corporate development at a US-based communications company. “Mega-value IPOs will be a bit subdued,” he said. “There is still lot of volatility in the market.”