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The Covid-19 pandemic rocked global capital markets, creating seismic volatility in equity markets and leaving many planned IPOs Covid casualties. But as risk appetite recovers and there is still a lot of cash sitting on the side lines we are seeing the frozen IPO market starting to thaw.

JDE Peet raised €2.25bn last week in what was Europe’s biggest IPO since 2018, with shares pricing at the upper end of the proposed range and then quickly rallying from the IPO price to trade around €37. This was a very encouraging debut and may well for companies seeking to list this year – or at least in June.

Warner Music Group is due to IPO tomorrow (Jun 3rd), leading a group of companies that are expected to raise over $3bn. Warner Music is aiming to raise $1.8bn, selling 70m shares, or about 14% of the company. Shares are due to be priced at between $23 and $26 each. Plans for the IPO were shelved in February due to the coronavirus pandemic.

ZoomInfo is also due to IPO this week (Jun 4th) and will price the stock between $19 and $20, having previously expected to price between $16 and $18.

Pliant Therapeutics expects to IPO tomorrow with shares offered at between $14 and $16. It has also increased the offering from 6m shares to 9m shares, indicating decent demand.

Legend Biotech will IPO on Friday (Jun 5th) with an offering of 18.4m shares priced at $18-$20, which is expected to raise $350m.

These IPOs will be important tests for capital markets in the wake of the coronavirus pandemic, which needless to say rattled investor confidence. Clearly though, whilst sentiment is still a little frayed, we are seeing improved risk appetite and investors are sitting on chunks of cash that need to be put to work.

The S&P 500 is above 3050 and its 200-day moving average, whilst the Vix is under 30. The market is significantly calmer than it has been, albeit on forward valuations it does look rather pricey, which demands a pullback.

Nevertheless, now that central banks have all but killed bond markets, the action is shifting back to equity markets and cash needs to find a home.

We will be watching these closely to see whether it encourages some of the larger names and ‘unicorns’ such as Airbnb, Robinhood, Instacart or Palantir to come back to the IPO table this year in spite of the pandemic.

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