00:00:18:21 - 00:00:21:20 Welcome to another episode of Mizuho Markets Mindset. 00:00:21:23 - 00:00:24:08 My name's Josh Weismer and I'm here with my colleague, 00:00:24:08 - 00:00:27:06 Rich Soto, to talk about the state of the IPO market. 00:00:27:21 - 00:00:33:06 So Rich, we're through the first month of the year and it's been an incredibly busy start 00:00:33:06 - 00:00:34:17 so far from an IPO perspective. 00:00:35:01 - 00:00:39:01 We've got seven deals that are priced so far to raise just over two and a half billion. 00:00:39:14 - 00:00:43:16 Average offer to current right now and performance of those deals has been a little mixed 00:00:43:16 - 00:00:47:02 with most of them average around flat right now 00:00:47:02 - 00:00:50:10 and a number of IPOs that are expected to price over the next couple of weeks. 00:00:50:13 - 00:00:53:18 But I'm curious to get your take on what you're seeing in the TMT market 00:00:53:18 - 00:00:56:21 and what does the pipeline look like and what 00:00:56:21 - 00:01:00:06 subsectors within TMT do you see being important throughout 2026? 00:01:00:16 - 00:01:03:22 So Josh, we've seen a very positive macro backdrop across the board, 00:01:03:22 - 00:01:06:21 which has led to a really positive TMT pipeline. 00:01:07:05 - 00:01:12:09 We've seen that across geographies, whether that's European, Asian, Latin American companies 00:01:12:09 - 00:01:15:19 coming to market and the pipeline is looking robust across subsectors. 00:01:15:19 - 00:01:21:20 We're seeing fintech, software, internet, obviously a lot of these very high-profile AI names as well, 00:01:21:20 - 00:01:27:10 that are preparing and looking to launch either in 2026 or the early part of 2027. 00:01:27:15 - 00:01:32:12 I think one of the things that we're also seeing is the SEC backlog 00:01:32:12 - 00:01:36:09 became very constrained with the government shutdown. 00:01:36:16 - 00:01:38:07 We're easing off of that now. 00:01:38:11 - 00:01:41:23 So the companies that are looking to kick off processes today 00:01:41:23 - 00:01:45:18 are probably going to be more or less in time for a summer of 2026 IPO. 00:01:46:00 - 00:01:47:15 What are you seeing, Josh? 00:01:47:15 - 00:01:53:10 Yeah, really one of the things that I noticed this year is the increase in activity from the sponsors. 00:01:53:21 - 00:02:01:20 If you look at 2025, there were 20 private equity-backed deals versus 14 in 2024. 00:02:02:17 - 00:02:05:21 And we've seen a lot more activity at the start of the new year here. 00:02:06:03 - 00:02:09:23 The Medline deal toward the end of last year obviously went very well. 00:02:09:23 - 00:02:12:09 It's trading up 50% from its IPO price. 00:02:12:09 - 00:02:17:19 And we're seeing all of the sponsors look at the IPO market as a viable exit path 00:02:17:19 - 00:02:22:19 for their portfolio companies after again, similar to the TMT space, 00:02:22:19 - 00:02:27:12 having a three or four-year lull in activity from the financial sponsor community. 00:02:27:12 - 00:02:31:04 And I think that if you look at 20 deals in 2025, 00:02:31:04 - 00:02:36:02 it's quite likely, given what we've seen in the market right now that we have 00:02:36:02 - 00:02:39:12 double that from a public IPO standpoint. 00:02:39:12 - 00:02:43:05 I think if you look and canvas the top 20 financial sponsors, 00:02:43:05 - 00:02:47:13 each of those names has somewhere between two and four portfolio companies 00:02:47:13 - 00:02:51:08 that they're contemplating taking out, whether it's in 2026 or 2027. 00:02:51:14 - 00:02:56:06 So it feels like that's shaping up to be a very robust year from a sponsor standpoint. 00:02:56:17 - 00:03:01:03 And from a sector standpoint, industrials continues to be incredibly busy. 00:03:01:07 - 00:03:05:04 There's a number of defense technology companies that are either on the road, 00:03:05:04 - 00:03:09:20 have priced recently or queuing up to go public later this year. 00:03:10:08 - 00:03:14:17 And that seems like that's going to be a very prolific area of the capital markets for a while. 00:03:14:21 - 00:03:18:18 But also on the consumer side, I was down at ICR a couple of weeks ago 00:03:18:18 - 00:03:22:17 and the sentiment down there was as positive as it's been in several years. 00:03:22:18 - 00:03:26:19 And we're already seeing some sponsor-backed consumer names 00:03:26:19 - 00:03:32:06 and some non-sponsor backed consumer names starting to line up and think about an IPO in 2026. 00:03:32:14 - 00:03:37:02 I'm curious to get your take, and you talked about AI and obviously, 00:03:37:02 - 00:03:43:05 not only in AI, but in some other sectors as well, there are some incredibly large transactions out there 00:03:43:05 - 00:03:46:19 that are rumored to be coming, whether it's in 2026 or 2027. 00:03:47:12 - 00:03:53:14 And by large, I mean some potentially bigger than the largest IPO of all time to date. 00:03:54:00 - 00:03:59:08 I'm curious to get your take on market saturation and volume, and is there enough 00:03:59:08 - 00:04:03:17 demand out there on the part of the buy-side to have some of these deals get done, 00:04:03:17 - 00:04:09:09 but also leave enough on the table for the smaller transactions to occur over the next 12 months? 00:04:09:10 - 00:04:16:11 We're seeing very clear preparations from some of these best-in-class mega-cap private companies 00:04:16:11 - 00:04:20:05 that are looking to access the U.S. public markets for the first time. 00:04:20:16 - 00:04:27:06 Each situation is very particular, but I think the tactics around these IPOs 00:04:27:06 - 00:04:31:08 will be different than just doing your typical $500 million or a billion dollar IPO. 00:04:31:18 - 00:04:34:16 I think we will see very robust friends and family rounds. 00:04:34:19 - 00:04:40:00 We will see very robust cornerstone investments as part of any of these IPO processes. 00:04:40:07 - 00:04:44:05 If you're looking to raise $25, $50, $100 billion, 00:04:44:05 - 00:04:49:16 from just a market saturation perspective, you'll see certain 00:04:49:16 - 00:04:54:02 certain processes that are just different to what we typically see. 00:04:54:12 - 00:05:01:05 We expect, because the cap structures of these companies are already full 00:05:01:05 - 00:05:04:07 from the long-only investor sovereign wealth funds, 00:05:04:07 - 00:05:09:10 we expect these to continue to support these deals in the public markets. 00:05:09:20 - 00:05:15:13 So we would anticipate if you're raising say a $50 billion IPO, to have $10, $20, $30 billion 00:05:15:13 - 00:05:18:06 spoken for ahead of launching this IPO. 00:05:18:15 - 00:05:21:20 That will make a pretty big difference from an execution perspective 00:05:21:20 - 00:05:24:02 versus what we see in a typical IPO. 00:05:24:11 - 00:05:28:02 I think investors are incredibly excited about these prospects. 00:05:28:09 - 00:05:32:06 I think there's a premium for growth and these companies are all, as you know, 00:05:32:06 - 00:05:35:17 very high growth and there's not a lot of exposure currently 00:05:35:17 - 00:05:39:09 that investors have to these best in class AI stories. 00:05:39:09 - 00:05:43:12 And then some of them are just, they're just different than everything out there 00:05:43:12 - 00:05:44:12 that's in the public markets. 00:05:44:14 - 00:05:47:08 People have been constrained in how they can invest 00:05:47:08 - 00:05:51:09 on the public side in some of these best-in-class large companies 00:05:51:09 - 00:05:53:13 because they've just stayed private for so long. 00:05:53:19 - 00:05:57:00 I think for the first time in 2026 and early 2027, 00:05:57:00 - 00:06:00:03 they're going to get access to it and we expect very robust demand for that. 00:06:00:05 - 00:06:02:12 You know, a lot has been made about the Fed and the impact 00:06:02:12 - 00:06:07:01 that some of the rate cuts last year had on the stock market. 00:06:07:10 - 00:06:11:11 And we see right now where the Fed is heading in 2026. 00:06:11:16 - 00:06:15:00 What do you think the biggest impact that has had on the IPO market 00:06:15:00 - 00:06:16:10 equity capital markets in general? 00:06:17:02 - 00:06:21:12 You know, Josh, I think what we've seen now, now that President Trump has made his Fed pick, 00:06:21:12 - 00:06:26:12 I think people will be very focused on the underlying data on inflation 00:06:26:12 - 00:06:31:16 and how sort of the expectations for just general investor confidence, the general data 00:06:31:16 - 00:06:36:01 around GDP growth and inflation sort of translate into the expectations 00:06:36:01 - 00:06:39:08 for this new Fed chairman sort of throughout the whole year. 00:06:39:14 - 00:06:41:22 The impact from a macro perspective, 00:06:41:22 - 00:06:48:02 we've been in a bit of a super cycle in which we've had steady equity gains now for a couple of years, 00:06:48:02 - 00:06:53:12 and that hasn't yet translated into the IPO market in great part because small- and mid-cap 00:06:53:12 - 00:06:57:23 have vastly underperformed the sort of large-cap and mega-cap names. 00:06:57:23 - 00:06:59:10 If we continue to see 00:06:59:10 - 00:07:04:19 a Fed that is cutting rates, we'll see outperformance from small and mid-cap names, 00:07:04:19 - 00:07:08:08 which should translate into a more robust IPO market. 00:07:09:01 - 00:07:13:20 So Josh, on your end, how do you see the breadth of the market 00:07:13:20 - 00:07:18:21 and not only that, but who is going to be selling into IPOs 00:07:18:21 - 00:07:22:01 from a sector and from a stakeholder perspective? 00:07:22:13 - 00:07:25:22 I think one of the things that we're seeing in 2026 00:07:25:22 - 00:07:30:21 early and moving into deals that we see in the pipeline, what we've been pitching 00:07:30:21 - 00:07:36:09 is we've now got a market that's focused, we talked about SMID caps a little bit. 00:07:36:18 - 00:07:39:10 I think you're going to see deal sizes across the spectrum this year. 00:07:39:11 - 00:07:42:22 I think that's one of the things that we see in a more robust IPO market, 00:07:42:22 - 00:07:47:13 which I think we're in right now, that deals from down to $150 million 00:07:47:13 - 00:07:50:03 to tens of billions of dollars can get done in this market. 00:07:50:03 - 00:07:54:18 And I think the other thing that we're seeing right now is a broadening out of sector exposure. 00:07:55:19 - 00:07:59:01 We talked about TMT, we talked about industrials. 00:07:59:08 - 00:08:01:07 There's a lot going on in biotech right now. 00:08:01:09 - 00:08:06:21 The biotech overall capital raising landscape has been incredible for the last six months or so. 00:08:07:06 - 00:08:10:10 And we've already seen biotech IPOs kick off the year. 00:08:10:13 - 00:08:14:07 We've got several on the road right now and a lot lining up in the pipeline. 00:08:14:15 - 00:08:19:03 So having this broad exposure to the IPO market from a sector standpoint, 00:08:19:03 - 00:08:23:05 I think is really healthy and really speaks to the health of the IPO market 00:08:23:05 - 00:08:27:17 and the demand that we're seeing on the institutional investor side to put capital to work 00:08:27:17 - 00:08:31:00 in the IPO product to try to drive alpha across their portfolio. 00:08:31:08 - 00:08:35:23 And we saw $46 billion of IPO issuance in 2025. 00:08:36:19 - 00:08:39:14 And putting those large multi tens of billions of dollars 00:08:39:14 - 00:08:41:01 deals on the shelf for a second, 00:08:41:12 - 00:08:43:18 I think it's quite likely that we can see double that 00:08:43:18 - 00:08:46:16 in 2026, just given what we're seeing 00:08:46:16 - 00:08:49:07 in the market right now, given the velocity out of the gate 00:08:49:07 - 00:08:52:14 that we've seen so far and given the pitch activity, 00:08:53:06 - 00:08:55:18 financial sponsors, VC firms that are looking 00:08:55:18 - 00:08:57:06 to get liquidity in their portfolio 00:08:57:18 - 00:08:59:13 after not having it for several years, 00:08:59:15 - 00:09:02:01 I think is really building up 00:09:02:01 - 00:09:05:11 to what should be a very successful IPO market in 2026. 00:09:05:14 - 00:09:07:02 Rich, thanks a lot for joining me. 00:09:07:15 - 00:09:12:04 And appreciate everybody taking the time to hear our views on the capital markets in 2026. 00:09:12:11 - 00:09:16:05 It feels like it's going to be an incredibly robust year for IPOs. 00:09:16:05 - 00:09:19:10 And to the extent that you're thinking about accessing the public markets, 00:09:19:10 - 00:09:23:06 please reach out to your Mizuho banker so we can give you our advice and thoughts on the process.