US companies raise $20 billion as a result of the subsequent issue of shares

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Rising stock prices, falling interest rates and the looming presidential election fueled a wave of heavy selling in US stocks in September, with the so-called sell-off in publicly traded companies hitting the highest level since the capital markets boom from 2021.

The following US-listed companies raised more than $20 billion in September, the most in a single month since November 2021, according to Dealogic. The following include shares sold directly by a listed company to raise new capital, as well as large deals by existing investors such as private equity firms.

“People are taking advantage of the improved market context and lower volatility environment ahead of the election period,” said Brad Miller, co-head of Americas equity capital markets at UBS. “It created a perfect window for further activity.”

Some of the biggest recent deals included a $1.1 billion stake in Viking cruise line, raising cash for private equity and pension funds that went public earlier this year. Meanwhile, GE Aerospace sold $1.3 billion of shares in GE Healthcare to reduce its debt.

The increase should provide some reassurance to fee-free bankers and potential listing candidates after a third consecutive year of disappointing volumes in the market for initial public offerings. A healthy follow-on market is often seen as a prerequisite for a recovery in the IPO business, where deals are riskier and take longer to complete.

It’s also good news for private equity firms, many of which have been under pressure to sell stakes in listed companies to return cash to investors.

After a volatile summer dominated by worries about the growth outlook and interest rates, the S&P 500 returned to record highs this month after the central bank cut interest rates by half a percentage point and investors grew more confident that long hoped for success. -for “soft landing” – bringing inflation back to target without a serious economic downturn.

“One thing we’ve been hearing from investors for a long time is that they just wanted to start lowering rates,” said Clay Hale, co-head of equity capital markets at Wells Fargo. “Now the first cut is in the rearview mirror. . . it gave people more confidence and belief that there won’t be any big surprises.”

In addition to the increase in the sheer amount of cash raised, several bankers said they were also encouraged by healthy investor appetite, which allowed companies to sell large blocks of shares at relatively small discounts.

“Subsequent cuts have narrowed from where we were in the first half of the year. . . (and) the bids were way oversubscribed,” Miller added.

September is also traditionally a busy month for IPOs, but the uncertainty surrounding the Fed’s mid-month meeting has narrowed the window for new listings, which require lengthy investor tours. Most big companies have already delayed their plans until 2025, when bankers hope to finally see a return to more normal volumes.

Subsequent volumes are also expected to decline over the next few weeks as companies enter into lock-in periods around their third-quarter earnings reports and the US election increases the likelihood of market volatility.