Looking to make a mark

U.S. IPOs hope for stock market volatility reprieve

NEW YORK — U.S. companies planning to launch initial public offerings (IPOs) in the coming weeks are hoping that August’s bout of stock market volatility will subside this month, according to investment bankers and capital markets lawyers advising them.

The U.S. trade war with China caused the stock market to seesaw in August. The CBOE Volatility index <.VIX>, Wall Street’s fear gauge, rose around 17.7% last month, the secondbiggest monthly jump so far in 2019. Last month was also the worst August for U.S. stocks in four years.

Market volatility can prevent IPOs from going ahead because it makes it difficult for investment bankers to price them by balancing demand and supply for the shares on offer.

However, August is traditionally a slow month for IPOs due to the summer holidays. Only seven IPOs took place last month.

By contrast, almost 70 companies have registered with the U.S. Securities and Exchange Commission for an IPO, according to research firm Renaissance Capital, which estimates companies could raise more than $15 billion from September until the end of 2019.

WeWork owner The We Company, food delivery platform Postmates Inc and fitness startup Peloton Interactive are among the companies expected to launch IPOs by the end of the year.

Representatives for the three companies declined to comment on their IPO plans.

“I can safely say that this has been one of busiest Augusts we have ever had in terms of IPOs getting geared up for September,” said David Goldschmidt, global head of capital markets at U.S. law firm Skadden, Arps, Slate, Meagher & Flom.

The U.S. market for IPOs typically gets back up to full speed once dealmakers and investors return to work after the Monday Labor Day holiday.

So far in 2019, companies have raised $36.5 billion through IPOs, down slightly on the same point in 2018 but the third most active year since the 2008 financial crisis, according to financial data provider Refinitiv.

While the shares of this year’s two most high-profile IPOs, Uber Technologies Inc and Lyft Inc , have performed poorly after their flotation, most IPOs have fared well in 2019.

Renaissance Capital’s IPOfocused exchange-traded fund is up more than 30 percent so far in 2019, around double the rise in the S&P 500 Index over the same period.

Strong IPO performers have included plant-based burger maker Beyond Meat Inc and video conferencing company Zoom Video Communications Inc .

EDUARDO MUNOZ/REUTERS Traders work on the floor at the New York Stock Exchange (NYSE) in New York, last month.