US IPO market in near-shutdown after government closure
The US government shutdown has the IPO market in a seizure.
Some deals may survive the resulting closure of the Securities and Exchange Commission – one company managed to go public after the SEC closed, two others launched in the hope of listing this week and half a dozen others had filed to debut in October. But it is companies one step behind – those that have filed confidentially with the SEC – that are most vulnerable to a prolonged shutdown.
“Obviously, the government shutdown is not ideal,” said Jill Ford, co-head of equity capital markets at Wells Fargo. “There were a lot of companies that had accelerated their plans to go public later this year or in early 2026, but they may have to revert to their original timing, depending on how long the shutdown lasts.”
After Congress failed to pass a continuing resolution, the US government shutdown went into effect at 12:01am on Wednesday, leading to skeleton staffing at the SEC and ceasing the regulatory processes required to go public. The SEC’s electronic Edgar filing system continues to function, though, allowing seasoned companies to fund across capital markets.
IPOs and newly public companies, however, are obligated to undergo regulatory scrutiny that ensures financials, accounting and management disclosures on operations are up to snuff. A critical and last step in that process is for the SEC to declare the IPO registration statement effective, allowing the stock to trade.
Pre-effective
Commercial Bancgroup, a Tennessee community bank, gained effectiveness for its Nasdaq IPO on Tuesday ahead of the government shutdown, allowing for pricing the following night. It even managed to increase the Hovde Group-led offer to US$172.5m from US$100m targeted in the launch registration statement filed with the SEC.
Washing machine maker Alliance Laundry and Phoenix Education Partners, the Apollo-backed owner of the University of Phoenix, also gained SEC effectiveness on Tuesday for their IPO registration statements after marketing began on Monday. Their IPOs are roughly US$135m and US$700m and are expected to price after the US market close on October 8 – there is a safe harbour that would allow them to increase or decrease their offers by 20% without requiring SEC sign-off.
One quirk for Alliance and Phoenix is that even if they cannot price their IPOs, they would still be subject to the regular reporting requirements of a public company.
“This is fairly risky,” said Anna Pinedo, a partner at law firm Mayer Brown. “You should have a high level of confidence that the deal is going to price.
“It requires careful consideration given that if, unfortunately, the IPO doesn’t proceed, the issuer still becomes subject to SEC reporting. And [they] would have to seek to terminate SEC reporting requirements on the basis that no securities were sold.”
The IPOs of Alliance and Phoenix are both oversubscribed, bankers involved told IFR (click for further details on Alliance, Phoenix and Commerical Bancgroup).
Delay remover
There is another workaround, but one that carries the risk of ongoing SEC reporting requirements.
Companies that have already publicly filed an IPO registration statement could remove the “delaying amendment”, refile with full offering details including size and price and gain effectiveness 20 days after pricing.
Amid the previous US government shutdown in late 2018/early 2019, LNG exporter New Fortress Energy removed the delaying amendment to facilitate its US$291.7m Nasdaq IPO. That shutdown lasted 35 days – the longest in US history – forcing most companies to delay their IPOs.
Better year
The government closure comes amid a better year for IPOs. This year 57 companies have raised US$30.6bn through US-listed IPOs, slightly below the US$30.8bn raised by 64 companies in all of 2024 and the most active year-to-date period since 2021, according to LSEG data.
“We haven’t seen a strong IPO market in three and a half, four years, and finally we’re seeing one,” said a securities lawyer who has half a dozen IPOs that have been put on hold. “Issuers have been waiting 18 months, two years to get ready to hit the window. And then this happens.”
Since mid-September, half a dozen companies have publicly filed documents with the SEC to go public in October. None will be able to launch because they have not amended registration statements with shares offered and indicative ranges, unless they remove the delaying amendment.
Andersen Group, the tax and consultancy business formerly known as Andersen Consulting, crypto custody provider BitGo and expense management software provider Navan were all planning to launch IPOs this coming week, bankers involved told IFR.
“We are all waiting to see how long the government shutdown will last,” said a co-head of Americas ECM at one bank. “There is a frustration that we cannot press 'go' on launching because we have no sight line to pricing.”
Others in that cohort are electric plane maker Beta Technologies, baby food maker Once Upon a Farm and wealth management adviser Wealthfront. Their public IPO filings start a 15-day viewing period, after which they can begin marketing.
No comment
Other companies have confidentially filed and were working with the SEC to finalise their documents before publicly filing. That process allows companies and lawyers to work through details behind closed doors.
If the shutdown is prolonged, the inability of companies to get comments would create a backlog at the SEC once the government reopens.
There are, though, a few silver linings.
The shutdown is occurring at the end of a quarter so companies naturally would be working to compile preliminary financial results for the third quarter to market IPOs.
“I would point out that we are at quarter-end and companies would likely want to include flash [third-quarter] numbers in their IPO prospectuses,” said Clay Hale, who co-heads ECM at Wells Fargo. “If there is a quick resolution, we would view the shutdown as more of a speed bump.”
The bigger consolation is that the vast majority of companies will be able to sell stock, issue convertible debt or straight debt. Companies that the SEC classifies as well-known seasoned issuers gain immediate effectiveness, allowing them to proceed with ECM transactions through the Edgar system.