Healthcare, tech are 'major players' in IPO momentum

The IPO market has started to see increased activity in 2024, with 33 IPOs so far. Renaissance Capital Assistant Portfolio Manager Avery Marquez joins Yahoo Finance Live to discuss why she believes a spring pickup is starting to materialize.

Marquez states that the IPO market is "off to a very good start" this year, noting that returns can make or break whether issuers believe a company is ready to go public. She highlights that there have been improved returns. If large deals continue to outperform, these returns "will be a huge driver" in seeing "more issuers come to market."

Furthermore, Marquez identifies several key sectors where the IPO market could see increased activity, including healthcare, technology, and industrials.

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Editor's note: This article was written by Angel Smith

Video transcript

SEANA SMITH: So we have some mixed, I guess, looks here at the IPO market. You could be more of an optimist and say, hey, the fact that we have seen 33 companies go public, that could be a strong indication just in terms of what we could expect once the Fed cut rates. But what do you think this signals about the activity that we'll likely see for the rest of the year?

AVERY MARQUEZ: Yeah, absolutely. I think I'm more of an optimist. I think that the IPO market is off to a very good start so far in 2024. You pointed out that 33 number. But looking at just companies that have raised $100 million or more, that sizable group, we've seen a pretty sizable increase over the last two years, so far this year. And we're only, you know, a couple weeks into the second quarter.

I think that we've seen a lot of activity in the pipeline, both the private and the public backlog. And we are starting to see this spring pickup materialize. We have two large deals on the calendar for this week and already two more on for next week, including Ibotta, which is another large tech deal. So I think that the IPO market is in a good place, as we head into the rest of the year.

MADISON MILLS: Avery for the companies that are sitting on the sidelines here, what do you think could be the single biggest catalyst to make the final leap and go public this year?

AVERY MARQUEZ: Returns are definitely going to be at the forefront of these issuers' minds. We have seen returns improve so far this year. We saw them improve last year. And going forward, I think if we continue to see that these recent large deals outperform, that will be a huge driver for continued activity, especially from these tech deals that we've seen, [? Reddit ?] and Astera, and now Ibotta next week.

They represent probably the majority of the IPO backlog. And seeing these deals do well will encourage more issuers to come to market.

SEANA SMITH: Avery, where are you expecting to see the most activity. Because since the start of the year, we have seen a number of sectors see some increase. And when it comes to the performance of some of these IPOs, I think [? Reddit's ?] performance at least, initially, surprised the Street. What do you think that signals just in terms of where we will likely see that activity industry-wide?

AVERY MARQUEZ: Healthcare is always one of the most active sectors usually followed by tech. That has obviously dropped off the last couple of years, as we've seen the tech sector deteriorate. But we have a diverse group of IPOs preparing to go public. We have names from the consumer sector, financials, industrials.

I do think that we are expecting a revival in tech this year. We could see that start to jump back up maybe by deal count,. Definitely in terms of proceeds. But healthcare, tech, [? a ?] consumer, those three I think are going to be a major players this year in activity.