Image Source: Kevin Smith on Flickr

Three high-profile companies are planning to make their debut on the stock market this September. Investors see the three deals as vital to revitalizing the US initial public offering (IPO) market, which has been battered lately by mounting interest rates as the Federal Reserve took action to offset the rising inflation.

Instacart, Arm, and Klaviyo Preparing to Go Public in September

After a prolonged drought in the IPO market, September is poised to witness a potential resurgence with the highly anticipated debuts of three prominent companies. Notably, delivery company Instacart, SoftBank’s chip designer Arm, and marketing automation firm Klaviyo are all bracing to make their long-awaited market entrance this month, possibly signaling renewed investor interest in the troubled IPO landscape. 

In particular, Instacart, a delivery and pick-up service provider also known as Maplebear, set on Monday a target of up to $9.3 billion in valuation on a fully diluted basis in its much-anticipated US debut. The figure represents a significant discount on the company’s value at its latest funding round. 

According to Reuters, Instacart and its investors are looking to raise up to $616 million in the IPO, with 22 million shares priced between $26 and $28 set to be offered to investors. Surprisingly, cornerstone investors agreed to purchase up to $400 million worth of stock sold in the offering, representing almost two-thirds of the total proceeds at the top end of the price range. 

UK-based chipmaker Arm and marketing automation solution provider Klaviyo is also set to go public in September. In particular, Arm is close to securing the necessary investor support to attain the fully diluted valuation of $54.5 billion, meaning the chipmaker will likely be able to price its long-expected IPO at the top or above its per-share range of between $47 and $51. 

At the same time, Klaviyo is targeting a fully diluted valuation of up to $8.4 billion, with its selling shareholders offering 19.2 million shares at $25 to $27 apiece. The company aims to bag $518.4 million at the top end of the range.

Reviving the Battered IPO Market

Instacart, Klaviyo, and Arm’s planned debuts come at a critical time for the US IPO market, which has experienced a significant drought for the past year and a half. Since the end of 2021, exit volume for tech startups has been poor. 

According to Crunchbase data, billion-dollar exits among startups began to decline in frequency in the final quarter of 2021. Specifically, US companies’ pace of unicorn exits fell from 71 in Q3 2021 to 45 in Q4 2021. 

This downtrend continued into 2022 when the number of billion-dollar companies exits plunged to 17, followed by a further decline to 13 in 2023. The rapid decrease in IPO activity has mainly been affected by rising interest rates, which have made borrowing and fundraising significantly more challenging over the past 18 months.

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