The success of the US Foods (USFD) IPO on the New York Stock Exchange today could defrost what has been a stagnant market for newly-public firms this year. As NYSE Group President Tom Farley noted to Yahoo Finance, this year has seen just 41 companies hit the public market compared to 82 during the same period of 2015.
US Foods was not the only company to IPO today. Gypsum Management and Supply (GMS) and Cotiviti Holdings (COTV) also hit the NYSE today, as well as a closed-end fund.
“Today is a really good signal,” Farley says. “Four good IPOs. Of the three operating companies ... all had very smooth IPOs. They’re all trading within about 70 cents of the first trade this morning."
Last year’s market volatility, as well as fears of inflated valuations, kept some companies on the sidelines of the public market through the early part of the year. Farley thinks that this is changing. “We have about a dozen companies that are circling June for their IPOs,” he notes, "and included among them are several well-known companies, large successful companies.”
Any uptick is a good one, but with unicorns like Uber and Airbnb sticking with private funding for the time being, Farley thinks it’s worth examining why. “The number of public companies in the United States is down by half in the last 15 years,” he notes. “And so there are issues that are impeding companies from going public, and I think we need to get back to basics. The trading of listed securities needs to be very simple, and we need to look again at the regulations to make sure that we have appropriate, sound regulations.”
As for those unicorns? Farley says his exchange is waiting with open arms to welcome them if and when they decide to IPO. “[Uber and Airbnb are] really in a class by themselves, meaning they can choose to go public whenever they want. Private financing is available to them. They have really wonderful business models and so whether they choose to go public in 2017, 2018 or 2019, it’s entirely up to them and we will be there waiting for them.”
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