IPO Report: IPO market braces for first tech unicorns in nearly two years

Posted By: EN Todayon: September 18, 2023In: Utility News

The initial public offering market, fresh off its biggest transaction of the year, is expected to welcome five deals this week, including two venture capital-backed companies that will be the first tech unicorns in nearly two years.

Grocery-delivery platform Instacart and digital-marketing company Klaviyo are expected to price their IPOs early this week and both have a valuation of more than $1 billion, which is the threshold to be considered a unicorn.

Instacart is planning to raise up to $660 million by offering 22 million shares priced at $28 to $30 each at a valuation of $8.3 billion. The company raised the price range on Friday, after the successful debut of Arm Holdings PLC
ARM,
-8.27%
a day earlier.

Read now: Instacart IPO: 5 things to know about the app that’s looking to ride a ‘massive digital transformation’ in grocery shopping

Instacart, which would trade under the ticker CART
CART,
already controls around 22% of the $132 billion U.S. online grocery-delivery market, according to Evercore analysts. The company is banking on a bigger online future for purchases of household essentials, one that over the decades could include more mobile checkout, electronic shelf tags and what Instacart describes as “AI-powered smart carts.”

A stock-market debut for Instacart, which was founded in 2012, would come after the company last year reportedly shelved its plans to go public after decades-high inflation, recession fears and a post-pandemic tech-industry slump soured investor appetites for IPOs. Last year, Instacart cut its valuation multiple times, but the company raised it this year to around $12 billion, according to the Information.

Klaviyo revised the terms of its IPO early Monday, with plans to offer 19.2 million shares it hopes will price between $27 and 29 each, up from a prior range of $25 to $27, potentially raising up to $556.8 million at a valuation of $7.3 billion.

The stock is expected to be listed on the New York Stock Exchange under the ticker symbol “KVYO.” Goldman Sachs, Morgan Stanley and Citigroup are the lead underwriters.

Rounding out the list are Gamer Pakistan, which is aiming to raise $8 million at a $115 million market cap; Xjet
XJET,
,
an Israeli 3-D printing company that plans to raise $6 million at a $77 million market cap; and Global Mofy Metaverse
GMM,
,
a Chinese tech company that is aiming to raise $6 million at a $130 million market cap.

Last week, five IPOs raised a total of $5.4 billion, led by Arm, which raised $4.9 billion at a $52.9 billion market cap. The stock gained 25% in its debut and finished the week up 19%.

On Monday, Arm’s stock fell 7.6% after Bernstein, which was not involved with its IPO, weighed in with a bearish rating of underperform.

“While expectations that Arm will be a beneficiary from AI growth may be adding a premium to the share price, we believe it is too soon to declare them an AI winner,” Bernstein’s Sara Russo wrote in a Monday note to clients. “In addition, we remain more conservative on their ability to deliver increased royalty rates at the pace management is guiding.”

One noteworthy addition to the IPO pipeline last week was the iconic German sandal and clog company Birkenstock. The company is planning to list on the New York Stock Exchange under the ticker “BIRK,” but has not yet set terms.

Renaissance Capital, a provider of institutional research and IPO exchange-traded funds, said Birkenstock is expected to raise about $850 million.

For more, see: Birkenstock is going public: 5 things to know about the iconic German sandal maker’s IPO designs

The Renaissance IPO ETF
IPO
has gained 34% in the year to date, while the S&P 500
SPX
has gained 16%.