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Biggest run of secondary offerings in a year shows new shift
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Large holders join corporate issuers with outsized selling
Corporate America and its biggest investors are finally accepting lower valuations in stock sales, sparking a sudden rebound secondary offerings after more than a year of nearly nonexistent share issuance in the US.
Over the past 10 days alone, US companies have raised more than $6 billion in equity sales, their biggest windfall in more than a year, according to data compiled by Bloomberg. The deals are providing long-awaited relief to balance sheets and a chance for existing holders to sell large stakes that were overdue for liquidation.
The jump is largely due to sellers toning down their expectations on valuation after more than a year of holding out for levels that at least approached those seen in 2021, dealmakers say. The S&P 500 remains down 16% since the start of last year despite a 4% recovery in 2023.
“The number of transactions that came so quickly was surprising to a lot of us on the Street, but it makes sense,” said James VanMilder, head of equity capital markets at Nomura Greentech. “Valuation expectations have come back to earth for sponsors, which is bridging this disconnect that we had before.”