Goldman Sachs (NYSE:GS) boss David Solomon is pinning his hopes of a capital markets rebound on the success of upcoming blockbuster Big Tech initial public offerings.
Coming off one of the worst years for IPOs in living memory, there has been little to cheer about in the 2023 capital markets scene.
Although the tech-weighted Nasdaq blue-chip index has rebounded 40% year to date, led by Big Tech heavyweights Nvidia Corporation, Meta Platforms Inc (NASDAQ:FB), Alphabet, and Apple, IPO activity remains in the doldrums.
However, with two hotly anticipated IPOs on the horizon, Wall Street activity may be prepping for a shot of adrenaline.
“Over the course of the next few months, especially if Arm and some of these other IPOs go well, I think you’re going to see a meaningful increase in activity,” Solomon told CNBC’s David Faber.
British tech darling Arm Holdings is gunning for a $50 billion-plus IPO in the coming months. Though much has been said of Arm’s reduced valuation in the lead-up to its Nasdaq flotation, the SoftBank-owned semiconductor designer’s IPO is still expected on the US market in years.
San Francisco-based online grocery giant Insacart is also expected to go public by the end of 2023.
The move comes after the online grocery giant shelved its public debut plans in 2022 due to a global downturn in the equities market.
Similar to Arm, Instacart’s promoters have rebased its valuation from $39 billion to $13 billion, making it a big-ticket debut no less.
With Goldman Sachs (NYSE:GS) gunning for a $10 billion fee target in 2024, the firm is doubtlessly waiting on tenterhooks to see how these flotations pan out.
M&A to trail IPO activity
Solomon did, however, warn that a rebound in M&A activity, Goldman’s bread and butter, is likely to trail an uplift in big-ticket IPOs.
Solomon has faced scrutiny from the media recently due to Goldman’s financial performance and his personal management style.
Some personal attacks brought up in his CNBC interview painted Solomon as lacking personality, having a “dehumanising” attitude to colleagues and having a short fuse.
“It’s not fun, you know, watching some of the personal attacks in the press,” Solomon said in response. “I don’t recognise the caricature that’s been painted of me. I have a lot of colleagues and clients I talked to, they don’t recognise that caricature either.”
As the preeminent global M&A machine, Goldman has felt the impact of a drastic market cooling of high-profile deals.
The firm this week announced another round of layoffs due in October.
Goldman was one of the last financial giants to hold off on mass firing after the 2022 market downturn, capitulating on 3,200 jobs, or 6.5% of its workforce, in the first quarter of 2023.
Solomon expressed regret in February for not laying off employees sooner.
Despite the 2022/23 downturn, Solomon “definitely" feels better about the capital markets’ prospects going forward, with Arm and Instacart carrying a lot of this burden on their shoulders.