As enthusiasm wanes for recent tech initial public offerings (IPOs), with shares of Arm Holdings PLC (NASDAQ:ARM), Instacart (NASDAQ:CART), and Klaviyo retreating toward their debut prices, investors are turning to other sectors in search of the next IPO boom.
Signs point to biotechnology and retail.
There is “pronounced potential” in both sectors, according to VStock Transfer co-founder and chairman Seth Farbman, who has played a key role in the successful execution of tech IPOs.
“Although biotech in 2023 paints a more reserved picture with a mere 23 IPOs, with the exception of Johnson & Johnson (NYSE:JNJ)'s Kenvue which drew $41 billion, there is a notable trend emerging with the inclination towards IPOs rooted in solid Phase 2 or Phase 3 clinical trial outcomes,” Farbman said.
He cited Acelyrin's $540 million IPO following its Phase 2b and Phase 3 testing as an example of this trend.
“While the current scene may seem quiet, projections indicate a revival by 2024, supported by the recent proactive IPO filings,” he said.
On the retail side, he noted there had been a “palpable energy” around dealmaking, pointing to transactions like Tapestry’s procurement of fellow luxury fashion group Capri Holdings and French luxury goods company Kering’s takeover of fragrance label Creed and its purchase of a 30% stake in Italian brand Valentino.
“The market's pulse suggests a resurgence, especially with IPO murmurs around giants like Birkenstock, Kim Kardashian's Skims, and Shein,” he said.
Birkenstock is expected to debut on the New York Stock Exchange in October, which could value the sandal-maker in excess of $8 billion.
Meanwhile, Kardashian’s shapewear brand Skims and fast-fashion retailer Shein are rumoured to be mulling IPOs, valued at about $4 billion and $66 billion in mid-2023 respectively.
Farbman concluded: “While the precise direction of the next IPO surge remains speculative, the signs point towards these sectors.”
Contact the author at emily.jarvie@proactiveinvestors.com
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