Skyrocketing IPOs and a ‘Golden Era’ Ahead

The exuberance is stunning.

Airbnb -- valued at $18 billion just eight months ago -- was worth more than $100 billion when it went public on Thursday. It’s still valued at more than Marriott and Hilton combined. The price differential to its IPO had many on Wall Street scratching their heads.

There were a few reasons for the surge. One is a flurry of demand from retail investors that was hard to measure, and scarcity of shares available to buy on trading day, people familiar with the IPO told Bloomberg’s Crystal Tse and Katie Roof. After all, Robinhood has given a swarm of investors a way to snap up fractional shares.

The exuberance spreads beyond IPOs. What’s more is that some bankers have told me they see a “golden era of LBOs” ahead. And Frank Aquila, the global head of M&A at Sullivan & Cromwell, says a new era of dealmaking is just beginning. 

CEOs are saying, “Where are we going next?,” he told me in a Bloomberg Television interview. While the economy is still weak, “what they’re looking at is post-pandemic. This is going to probably be a pretty good and vibrant economy with the savings rate being fairly high, and people wanting to get out and start doing things.”

“What you’re seeing is the beginning of a brand new M&A cycle,” he said. “This is the beginning of a lot of consolidation in the market place.”

No one on Wall Street could have predicted a pandemic that would send the market rally tumbling. And there are few who could have seen the market roaring back as it has. The list of risks is still long.

It includes geopolitical hiccups, market volatility and potentially stifling debt loads for firms in the airline, cruise and leisure sectors, Citigroup’s Tyler Dickson told us on Bloomberg Television. But he’s taking an optimistic route and sees a lot of dry powder ready to be deployed -- including $250 billion of possible deals by SPACs. It’s also clear that investors are starting to look past the pandemic.

In a first-ever television interview, Apollo’s co-head of private equity spoke to me about some of those opportunities. You can find the conversation with David Sambur here, one year into his role overseeing the business alongside his colleague Matt Nord. He speaks to the next generation of the firm.

More on Wall Street

• There’s an incredibly unequal recovery. More than 19 million Americans are on unemployment aid and the amount of people needing assistance is jumping again. Layoffs are a problem, and cities are closing again.
• One area in New York that’s been disproportionately hit? Street vendors. Morgan Stanley, after requests from employees, paired up with the Robin Hood Foundation to get $1,000 checks to 2,000 of them. There are 20,000 across the city -- and most have been ineligible for U.S. relief. Listen here to my conversation with Wes Moore, the CEO of Robin Hood.
• Ken Moelis is letting his bankers work from ... well, pretty much wherever they want. Listen to his interview here with Bloomberg’s Erik Schatzker.
• Paul Taubman sees black-swan events happening at an alarming frequency. Here is his interview with Bloomberg’s Ed Hammond.
• The New York Stock Exchange sees a ton more IPOs ahead. Here is our interview with NYSE’s Stacey Cunningham, after her firm worked on an absolutely historic year of listings.
• Silver Lake and Sixth Street Partners reap a $1 billion windfall after providing a lifeline to Airbnb in the heat of the pandemic. 

More to come. Many people I know are sticking around for the holidays -- I will be too. We have a few more blockbuster stories to close out the year, so I hope you stick with us! Tips and opinions welcome at [email protected].