In a new interview, Suzanne Shank — president and CEO of investment bank Siebert Williams Shank — said the IPO boom comes down to two main factors: companies repositioning themselves during the pandemic and the persistence of low interest rates from the Federal Reserve.
“I think we’re seeing companies that both benefited from the pandemic, as well as those that are sort of rebooting post-pandemic,” she says. “That has really been sparking this increased deal flow.”
Over the third quarter, which wrapped up on Thursday, 94 companies went public in the U.S. and raised a total of $27 billion. It amounted to the busiest July-September period since 2000, according to a report from Renaissance Capital.
Across the globe, more than 2,000 IPOs have raised a combined $421 billion so far this year, which marks a record high, Reuters reported.
Plus, more public offerings are on the way in the fourth quarter, including high-profile IPOs from delivery company Instacart and electric pickup truck maker Rivian, Yahoo Finance’s Jared Blikre reported on Thursday.
The prolonged policy of near-zero interest rates from the Federal Reserve has propelled company valuations and offered assurance of a friendly capital environment, Shank said.
“Earlier in the year, inflation concerns had investors worried that the Federal Reserve might change its policy, but after the Fed, said that inflation wouldn’t change over the long term,” she adds. “It’s really been robust IPO time.”
“Low interest rates have pushed up valuations for growth companies, and the hundreds of unicorns in the pipeline are looking to take advantage of that,” she says.
Uncertainty remains over how long the Fed’s low interest rates will persist. At a meeting last month, the Fed signaled the potential for six or seven rate hikes through 2024, as it considers tapering off its asset purchase program by the end of the year.
Shank began her career as a civil engineer, before she realized she could have more impact financing projects than designing them.
After earning a master’s degree in business administration from the Wharton School at the University of Pennsylvania, she co-founded the investment bank Siebert Cisneros Shank, which later became Siebert Williams Shank.
Speaking to Yahoo Finance, she noted IPOs have been concentrated in the health care and biotech sectors, but praised the strong performance across the economy.