Reddit, TPG Partners Highlight Crowded 2022 IPO Pipeline

(Bloomberg) -- TPG Partners LLC, Reddit Inc. and Via Transportation Inc. are among the high-profile companies headlining a crowded pipeline of 2022 initial public offerings after a record year of issuance delivered lagging returns.

Private-equity firm TPG set terms on Tuesday for an IPO that could raise a little over $1 billion. The first major listing of the year will set the tone for nearly 500 other U.S. IPOs whose prospectuses are already on file. They will test an IPO market that's grown more discerning after last year's returns failed to keep pace with the broader market.

“It's always hard to beat a year like 2021, but it will be especially tough in 2022,” University of Michigan professor Erik Gordon said in an interview. “The returns on 2021 IPOs are disappointing a lot of IPO investors. There also is a question about whether the better companies already went public, leaving less-good companies to do the 2022 IPOs.”

Investors are likely to demand more price concessions following last year's IPO performance, Bank of America Corp. managing director Sumit Mukherjee told Bloomberg in December. “And companies will also be more disciplined around what valuations they will be willing to accept.”

TPG and social-media platform Reddit were among the 265 potential U.S. IPOs announced during the fourth quarter alone. About half of those deals haven't yet come to market.

In total, 448 U.S. IPOs are formally in the pipeline after filing for potential listings within the past year. That tally excludes confidential IPO filings, such as ride-sharing firm Via and data software firm Cohesity Inc. Companies sometimes announce they have filed to go public without immediately revealing their filings, or the news can also leak to the press.

SPAC Deluge

A little more than half of the upcoming slate of deals is comprised of special purpose acquisition companies, which had a resurgence during the fourth quarter. SPACs priced at least 50 U.S. IPOs in each of the last three months of 2021, more than double the monthly average of 22 between April and September. Their recent popularity suggests these vehicles can continue to support a bigger IPO market than before the pandemic when SPACs were more rare.

More plans for IPOs are likely to emerge in the weeks ahead. There are nearly 1,000 private companies worth at least $1 billion each, according to CB Insights, including potential blockbuster listings like Elon Musk's Space Exploration Technologies Corp., digital payments firm Stripe Inc. and Fortnite maker Epic Games Inc.

These deals would follow a record year for IPO issuance despite weak returns. Last year's traditional IPOs closed on Monday an average of -2.2% below their offering prices, despite a 27% runup in the S&P 500 Index in 2021.