Buoyed by significant equity offerings from companies like SpaceX and Alphabet Inc, the total value of US equity capital raising this year is on track to break the record set in 2021, with more deals expected to follow.
Insiders indicate that the AI company Anthropic could launch its initial public offering as soon as September. Major investment banks are also encouraging several leading listed tech companies to issue additional shares, with Intel Corp being one of the targets; the chipmaker's stock price has more than doubled so far this year.
The banks' active promotion of follow-on offerings is underpinned by a Wall Street consensus: high-profile listings and share sales like those from SpaceX and Alphabet will continue to attract strong investor interest for subsequent new issues. The market is seen as capable of absorbing the massive supply of equity without concern that excessive fundraising will deplete available capital.
Renaissance Savidis, head of equity capital markets at investment firm Neuberger Berman, noted, "As long as these once-in-a-career, high-quality companies keep coming to the public markets, investors are willing to commit significant capital to participate."
According to data from London Stock Exchange Group (LSEG), total corporate equity fundraising in the US this year has surpassed $300 billion. Major deals in June—including SpaceX's $86 billion IPO, Alphabet's $85 billion share sale, and SK Hynix's US listing raising $26.5 billion—significantly boosted the overall volume.
Within the total fundraising structure, initial public offerings (IPOs) accounted for approximately $128 billion, less than half of the total. Follow-on offerings by companies raised over $142 billion. This year, many firms have utilized the at-the-market (ATM) offering model, popularized by Alphabet, as a primary method for share sales. Companies have also raised funds through convertible bond issuances. The statistics exclude financing by special purpose acquisition companies (SPACs).
Fundraising Volume Nears 2021 Record
In 2021, a bull market fueled by pandemic-era ultra-low interest rates saw total US equity fundraising reach $376 billion. The additional capital raising expected in the second half of this year will likely push the annual total beyond that figure. Reports suggest that Meta Platforms Inc is also planning a share sale worth tens of billions of dollars.
With a flood of new listings, a question arises: will investor capital be exhausted by the time Anthropic's massive IPO and numerous smaller new listings come to market later this year?
William Connolly, head of equity capital markets for the Americas at Goldman Sachs, pointed out that the US stock market's successful absorption of mega-listings like SpaceX has laid a solid foundation for subsequent equity financing.
"The market for new issues is not a zero-sum game, and capital is not a fixed pool. Money always chases quality opportunities, and the listing of many high-quality companies can actually attract more incremental capital into the secondary market," Connolly stated.
Market performance data supports this resilience: the S&P 500 and Nasdaq Composite indices have both gained nearly 10% year-to-date.
Investors now need to re-evaluate the business models of AI model developers and data center operators, which are capital-intensive with high expenditure. For example, OpenAI holds multi-party procurement contracts worth a total of $665 billion, but this asset is not reflected on its balance sheet.
Savidis commented, "Investors must dedicate significant effort to due diligence and analysis. These new AI business models represent a novel structure rarely seen before in the market. Overall, the market is willing to accommodate these unconventional equity and financial structures to capture the massive, unmissable opportunity presented by AI."
Investors are closely watching several key events to gauge whether the current wave of new listings can continue:
First, the share price performance of SpaceX after its lock-up period expires. The post-IPO lock-up for internal shareholders is expected to end around the time the company releases its first earnings report in August, allowing them to sell their holdings. The stock is currently trading about 8% below its offering price.
Second, the capital expenditure plans of leading tech firms like Microsoft Corp, along with ongoing monitoring of AI sector stock performance. SK Hynix's current share price is slightly above its $149 offering price. However, aside from SpaceX's weakness, AI chipmaker Cerebras' stock has fallen about 7% since its listing. The industry bellwether, NVIDIA Corp, has seen a notable pullback over the past two months, though it still maintains a year-to-date gain of approximately 9%.
Comments