SpaceX, OpenAI, Anthropic IPO Plans Drive Big Law Capital Markets Surge

Blockbuster initial public offerings (IPOs) planned by Anthropic, OpenAI and SpaceX are encouraging a growing number of companies to consider public listings, strengthening capital markets practices at major law firms.

Lawyers report a rise in interest from clients in the public markets, with some already in registration with the US Securities and Exchange Commission, while others are assessing the possibility of IPOs. Potential listings are emerging across technology, insurance, energy, infrastructure and healthcare sectors, they say.

“The market is definitely open,” said Ian Schuman, global chair of Latham & Watkins’ capital markets and public company representation practices. “A good showing by some of these larger deals, especially marquee names, is going to accelerate things.”

The renewed appetite for IPOs marks a welcome shift for major law firms after several years of hesitation from companies deterred by market volatility and rising interest rates. Strong debut performances are also helping to build momentum. Liftoff Mobile Inc, a Blackstone-backed mobile advertising company, saw its shares rise 21 per cent on debut after raising $437 million, Bloomberg News reported.

Companies are “pushing everything further forward so as to take advantage of this business cycle,” said Schuman, whose firm advised on the largest IPO so far this year, helping Cerebras Systems Inc raise $5.5 billion. “I feel fairly confident what you’re going to see is an acceleration of timelines.”

SpaceX is targeting a valuation of nearly $1.8 trillion in what would be one of the most closely watched public listings globally. OpenAI and Anthropic PBC are expected to go public this autumn, following SpaceX.

Canva Inc, Ramp and Databricks are among other companies where senior executives have expressed interest in selling shares to the public, though they have not committed to timelines, Bloomberg has reported.

“We are working with numerous large clients actively preparing to go public,” said Thomas Ivey, who heads the M&A corporate group in Palo Alto, California, for Skadden, Arps, Slate, Meagher & Flom. He declined to name clients, though the firm said they span “all industries”, including technology, fintech and crypto, insurance, mining, consumer and healthcare.

IPO Rebound

Global IPO volumes reached $45 billion in the first quarter, up 40 per cent from the same period a year earlier, according to Dealogic. The $23.7 billion in US IPOs in the first quarter was approaching the full-year totals of 2022 and 2023.

Big Law is seeing the strongest traction in areas requiring significant capital investment, such as infrastructure-scale computing, energy usage, hardware deployment and long-term research and development cycles, rather than asset-light software models that have historically dominated late-stage tech listings.

“All of these data centres need power,” said Jackson O’Maley, a capital markets partner at Vinson & Elkins in Houston. “If you are going to build out a transmission system to supply power to a data centre, or drill dozens of geothermal wells, those require a lot of capital.”

Vinson & Elkins capital markets lawyers are expected to act for issuers and underwriters across multiple IPOs in the energy, power, infrastructure and related sectors, O’Maley said, adding that he could not discuss specific client matters.

While mega IPOs are drawing significant attention, lawyers at Skadden are also seeing increased activity across convertible bonds, investment-grade debt, high-yield debt and other capital markets products. “The need for capital to fund AI, infrastructure and technology investment is a major theme,” said Ryan Dzierniejko, global head of Skadden’s capital markets practice.

Blockbuster Listings

The aftermath of the forthcoming blockbuster listings is expected to influence other companies’ decisions on whether to proceed with IPOs, Mr Dzierniejko said.

“Large, high-profile offerings can influence market sentiment and encourage activity,” he said. “But they can also lead to a more cautious environment if pricing or aftermarket performance disappoints.”

Gibson, Dunn & Crutcher is advising SpaceX on what could become the largest IPO in history. Cooley LLP and Wachtell, Lipton, Rosen & Katz are helping prepare OpenAI’s listing, while Anthropic has engaged Wilson Sonsini Goodrich & Rosati to guide its public market debut.

Davis Polk advised underwriters on AI chipmaker Cerebras’ listing in May. Vinson & Elkins and Latham & Watkins also worked on a pair of public offerings in the same month: Fervo Energy Co raised $1.9 billion to scale geothermal power, while EagleRock Land LLC raised $320 million to develop surface land rights in the oil-rich Permian Basin in West Texas.

“The IPO market is much broader than just one or two themes,” wrote Arnaud Blanchard, global co-head of equity capital markets at Morgan Stanley, on 27 May. “There is strong demand from a diverse investor base: growth investors, value investors, income-focused investors and sector specialists — all contributing to demand.”

 

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