This year was supposed to be the year of the unicorn IPO, with massively funded private startups like Uber, Lyft and Slack all preparing to go public.
Now just two weeks into the year, bankers say it’s turning into a “shitshow.”
The federal government shutdown has left the SEC closed, which means most companies cannot move forward with going public.
Market volatility is also roiling markets and creating an unstable environment for soon-to-be public companies.
Ask any banker which of the multi-billion dollar startups will go public first in 2019 and the answer is a sigh of resignation.
Back in December, 2019 was set to be the year of unicorns and with windfalls for patient investors, equity-vested employees and gleeful investment bankers alike. Now, just two weeks into the year, bankers have a new way of characterizing the tech IPO market: “a shitshow.”
For the most part, bankers said, tech IPOs are at a standstill. And that means bankers aren’t getting paid tens of millions in underwriting fees (not to mention bragging rights) they expected to land this year
Meanwhile, those banks are bracing for painful fourth-quarter results after facing a very difficult December amid market volatility.
IPOs on pause from Cloudflare and Zoom to Beyond Meat
Lawyers, who handle most of the initial public offering filings with regulators, can’t get paperwork approved since employees at the Securities and Exchange Commission have been out of commission due to the federal government shutdown.
“The biggest impact is for people that are trying to get out right now. There’s no good way to do that,” said Tom Holden, a partner at Ropes & Gray. “Longer horizon IPOs are moving forward. It’s not like people are just shutting down all together. We just don’t know when the SEC is going to open its doors again.”
At the end of 2018, bankers told Business Insider they expect to see around 50 IPOs this year, and many said they expect the deal value to be around 2018’s total of $19.8 billion.
Companies like Uber and Lyft, which both confidentially filed at the beginning of December, reportedly have not seen comments on their first draft.
Others like Cloudflare and Zoom held bake-offs to pick underwriters in early fall and were on track to file in early January, but have put it off due to the government situation, according to one source.
Sure, back in December the biggest question on everyone’s minds was market volatility. Tencent Music went public in mid-December and suffered for it. But others, like Beyond Meat, Revolve, and Virgin Trains, filed publicly at the end of the year. They are ready to go but still haven’t listed.
Read more: Uber, Lyft, China, and more — top tech investment bankers share their biggest hopes and fears for IPOs in 2019
And while volatility remains a factor, some believe that the shutdown is taking time out of a precious window of opportunity when investors are eager to see new assets on the public markets.
“There’s a perception right now that the market is open …read more
Source:: Business Insider