Citi's co-head of global equity capital markets said that market concerns over AI expansion spending, particularly data centre financing, continue to build, and investors will be more selective about new listings in the near term.
Aloke Gupte stated that the market is closely watching a series of recent events. Once the situation stabilises, investors will be more cautious when picking targets, since these companies need continuous financing to fund their expansion. As with any sector, there are standout assets in this space.
This month, the global data centre operator sector has seen sharp swings. DayOne Data Centers is evaluating its US IPO plan and considering postponing the offering or reducing the fundraising size; Nextdc slashed its earnings guidance sharply due to power supply delays, with its shares plunging 42% on Wednesday; South Korean new cloud vendor Elice tumbled 32% on its trading debut on Tuesday. Australia's Firmus Grid cancelled an IPO of about US$5 billion, while the UK's Nscale faced market resistance to its target valuation. Leading new cloud vendor CoreWeave has seen its share price fall about 30% this month, and its bonds have entered distressed territory.
At least for now, this shock has slowed the red-hot global fundraising pace. Data shows that total global fundraising through IPOs, follow-on offerings and block trades so far this year has exceeded US$840 billion, the highest since 2021. This fundraising boom has been led mainly by the United States and Asia (with Chinese company issuers as the main force), but recent rises in bond yields combined with weak new listing performance have weakened the risk appetite of both investors and issuers.
He said the next test will come in November. After the US midterm elections, companies will weigh the number of shares to issue against valuation levels. Backed by several large equity deals in Asia and the United States, Citi ranked first in global IPO underwriting for the year through September. Anthropic PBC plans to list next month, and many investors believe this blockbuster IPO will absorb a large amount of capital, while other US new listings in the same period have already been postponed or scaled back.
However, Gupte believes that once this series of major uncertainties is resolved, deal supply will pick up again next year. He said the global equity issuance boom is far from over, and issuers are still advancing IPO plans, signalling that the fundraising market will remain strong in 2027. He noted that AI has opened a super cycle for equity capital markets, driving trading activity across the entire ecosystem, unlike past cycles driven by a single theme, a single region or a single sector.
Gupte cited examples such as Schneider Electric's 6 billion euro (US$6.7 billion) equity sale and United Microelectronics's US$1.8 billion convertible bond issuance as proof that large financing deals are still getting done even in the current environment. Even with continued market volatility, large transactions can still be completed. Such landmark large deals will continue to land, but the pace before the end of the year will slow somewhat compared with mid-year.
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