Forefront Communications

Traders Magazine: For Traders, IPOs and Secondaries Provide Capital Raising Opportunities

Alexandra Hamer

Alexandra Hamer

Where have all the IPOs gone?

Perhaps they are sharing shelf space with all the stock buybacks that aren’t going on. Maybe not.

With the widespread economic shutdowns that countries around the world have been forced to enact to help slow the spread of COVID-19, companies across myriad industries have seen revenues dry up almost overnight. Governments have begun providing direct aid to small businesses as well as firms in the most impacted sectors, but analysts expect many public companies will be forced to turn to the secondary markets to raise funds, likely presenting traders who trade new issuances a tremendous opportunity over the coming months.

“Companies from hard-hit industries such as travel, retail, restaurants and energy firms are looking to raise fresh capital, and much of that will come through secondary and convertible offerings,” said John Eade, President of Argus Research. Recent secondaries and convertibles include the $500 million secondary raised by cruise line Carnival, Darden Restaurants’ (the holding company for brands such as Olive Garden and The Capital Grille) $400 million secondary, United Airlines $1 billion secondary and the $350 million convertible offering by natural gas behemoth EQT’s.

Eade, who earlier this month co-authored the quarterly syndicate market summary and outlook, published with agency-broker dealer Triad Securities Corp., stated that the IPO market also has some bright spots, with biotech and pharmaceutical firms expected to lead the way. He added that the IPO pipeline is robust, with about 100 companies having filed plans with the SEC to go public.

For the traders looking to capitalize on these opportunities, the ability to get high-quality calendar knowledge as well as independent color is imperative, according to Triad Securities Chairman Kevin Schultz, whose firm has long been seen as a go-to source on deal flow.

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