A wave of big initial public offerings is building as emerging growth companies stay private for longer and bulk up their valuations through secondary stock sales.
“I don’t know if it’s here forever, but I think you are winding up a coil,” said John Collmer, global head of private placements at Citigroup Inc. “You are creating this massive backlog of quality companies that will go public.”
The shift is being bolstered by institutional investors who are increasingly eager to invest in late-stage companies that could go public in the next three years, Collmer said in an interview on the sidelines of the bank’s Private Company Growth Conference in New York this week.
This explains why private placements are on the rise in 2025 following a slump that began in 2022 when the Federal Reserve raised interest rates. As developing technologies become increasingly prominent, investors are scurrying for exposure to those sectors that aren’t well represented in public markets — yet.
“Fifteen years ago, people wanted to invest in Uber because you couldn’t get it in the public market,” Collmer said. “Today they are looking for the artificial intelligence, robotics and defense technologies companies that they can’t get in the public market. They tend to be big industries that are being disrupted and the disruptors are in the private market.”