Market Conditions

IPOs Make Comeback With $35.2B So Far In 2018

IPO

With 120 companies using initial public offerings (IPOs) to raise more than $35 billion on U.S. exchanges, companies are raising capital through the markets at an uncommonly fast pace compared to the past 20 years. Dealogic data indicates that this year’s activity is the highest volume since 2014, as well as one of the busiest years on record, The Wall Street Journal reported.

While bankers do not have a clear reason as to why companies are seeking capital in the public markets, favorable business conditions might be at play: The stock markets are strong, and investors are seeking companies with high growth. Neither bankers nor lawyers expect this fast pace of IPOs to slow for the remainder of the year. And Morgan Stanley’s Evan Damast said that the “global IPO pipeline is stronger now than it’s been since the financial crisis.”

The news comes as BJ’s Wholesale Club stock proved to be a hit with investors after returning to public trading. Shares of the wholesale club retailer jumped more than 20 percent on June 28, reaching north of $21, Financial Times reported. BJ’s brought in $637.5 million by selling 37.5 million shares for $17, which was the top of the $15 to $17 range the retailer had provided in its regulatory filings. And, over the next month, underwriters will be able to purchase up to 5.6 million more shares.

BJ’s had filed for an IPO just seven years after going private, WSJ reported in May. The deal could value the Westborough, Massachusetts-based, membership-only warehouse chain at somewhere between $2 billion and $3 billion. With 215 locations across 16 eastern U.S. states, BJ’s saw $12.75 billion in annual sales and drummed up profits of more than $50 million in its fiscal year ending in February. It collected membership fees from five million members at a renewal rate of 86 percent last year. And, at $55 per year, membership fees totaled $259 million last year.

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