For proof that the market for initial public offerings continues to open despite the market’s downtrend, look no further than this week. Two large IPOs were successfully listed last night. Centuri Holdings (CTRI), a spinoff of Southwest Gas Holdings that provides energy and utility infrastructure services, priced 12.4 million shares at $21, the upper end of the $18-$21 range. Centuri raised $260 million. Ibotta (IBTA), a digital advertising platform, priced 6.56 million shares at $88, well above previous forecasts of 5.6 million shares at $76-84. Ibotta raised $577 million. Last week, UL Solutions (ULS) and PACS Group collectively raised about $1.5 billion. More than $1.25 billion is expected to hit the market next week, led by Rubrik. Suddenly, real money appears in the IPO market. The spring reopening, however, is threatened by the specter of higher interest rates. April is shaping up to be one of the best months in years. You can have a hundred companies applying to go public, but if no one sets a date and pulls the trigger, it doesn’t matter. “It’s been a while since we’ve had multiple consecutive weeks like this in the IPO market,” Renaissance Capital’s Matt Kennedy told me. See what has been collected already this month and what’s on the calendar for next week. IPO in April (raised over $100 million) This week Ibotta $577.2 million Centuri Holdings $241.8 million Last week UL Solutions $946.8 million PACS Group $450.0 million Contineum Therapeutics 110 million dollars Next week (proposed) Rubrik 678.5 million dollars. Loar Holdings $275.0 million. Marex Group 299.9 million dollars. Adding it all up, we raised $3.58 billion in three weeks. The last few weeks’ tally brought the total amount raised by IPOs to more than $10 billion for 2024. That’s a great start to the year. Before Covid, $40 to $60 billion was raised in a typical year. After Covid the numbers have changed everywhere, but the last two years have been disastrous. IPO: Total raised 2023 $19.4 billion 2022 $7.7 billion 2021 $142 billion (record) 2020 $78 billion 2019 $46 billion 2018 $47 billion Source: Renaissance Capital One particularly encouraging development for investors: a modest upside valuations for late-stage technology companies. The Forge Private Market Index, an index of 75 venture-backed late-stage companies actively traded in the private market, is up more than 4% this year after plunging 44% in 2022 and another 20% in 2023. Why higher interest rates hurt IPOs The main obstacle is rising long-term interest rates. Private companies don’t necessarily have a lot of debt, but multiples matter, and when interest rates rise or stay high, multiples come under pressure. Growth companies (i.e. technology companies) are more sensitive to changes in interest rates, because their cash flow projections are more ambiguous. When discounting those future cash flows to the present, a higher interest rate would make those future cash flows less attractive. This translates into a lower multiple for growth companies in a higher rate environment. Regardless: “IPOs can still happen in a 5% interest rate environment,” Kennedy told me. “Until we see a significant correction [in the market]However, most admit that higher rates make it harder to drum up investor interest in IPOs. “If rates rise towards 5%, the professional long-term investor will be willing to hang in there and ride it out.” market volatility,” Santosh Rao of Manhattan Venture Partners told me. “But the incremental investor, the retail investor, will say, ‘Why am I putting my money into risky investments, why not park it and wait?'”