The Year of the Mega IPO?

Chris Weekes
Last year was the year of the billion-plus IPOs. This year is the year of the mega IPO.

Albert Vanderlaan
Hi, my name is Albert Vanderlaan and I'm pleased to be back here once again with Chris Weekes, managing director at TD Cowen, which is a division of TD Securities.

Chris Weekes
Good to be back with you. I have about 25 years in the industry – equity capital markets. I currently run our tech, industrials, and equity capital markets, as well as our SPAC business.

Albert Vanderlaan
We're sitting here a few days after the conflict in the Middle East has kicked off here. Would love to get an initial impression of what you're seeing in the markets; what do we think this is going to do from an overall outlook perspective as we look at 2026?

Chris Weekes
I think we launched the attacks on Saturday, and the market is across the board flat to actually up a little bit as I was walking in here. There was a bout of volatility for sure – the S&P dropped about 3% – but then we’re bouncing back. I think we're up about 100 basis points today. So, while there's some intraday volatility, overall it seems to be being absorbed by the market at this point.

Albert Vanderlaan
Interesting. As compared to some other events, anything you see that may play out different here or is it more of a wait-and-see approach for the markets?

Chris Weekes
I think the market has been hyper focused on inflation and hyper focused on rates. I think the impact of the wars on oil prices, and across the board all of this is going to interact with tariffs and everything relating to inflation and affordability in the U.S., will be where investors are focused. Oil went from $65 to $75, and I think a lot of investors expected $130 oil. The 10-year went from $390 to $410. So, the market seems to be absorbing shocks like this a lot better. We're a year-plus into this administration and it's been a really noisy 14-15 months. I don't expect this is going to have a material impact on markets, and most large investors right now are not adjusting their portfolios based on the events of the last few days. If anything, they're just continuing to look at adjusting their portfolios when Anthropic or OpenAI decide to add a plug-in that's going to effectively destroy apparently another industry.

Albert Vanderlaan
Sounds about right. On that topic – between those two and SpaceX – one of the things we've been hearing is a lot of market chatter about those three IPOs in particular, potentially just taking up a lot of the space during the course of the year. So A) is that what you're hearing? And B) is there still an active pipeline of other second-tier or smaller IPOs lining up to get out at this point?

Chris Weekes
On the IPO side specifically, there were about 79 or 80 IPOs last year. When I talk about IPOs, I mean $50 million of proceeds or more, so has to have some size.

Albert Vanderlaan
And non-SPAC I imagine.

Chris Weekes
Non-SPAC, regular way, traditional IPOs. Historically, anywhere between 125 and 150 reasonable-sized IPOs. In 2019, there were 136 roughly. Last year, there were 80, but those 80 IPOs raised $50 billion. And in 2019, 136 IPOs raised $50 billion. In 2018, 150 IPOs raised $50 billion. Last year was the year of the billion-plus IPOs. This year is the year of the mega IPO. You've got names that have been rumored to go public – SpaceX, Anthropic, OpenAI, Databricks – that could be $1.4 trillion of market cap between four companies. On a proceeds basis, you could be returning somewhere between, call it $500 billion and $700 billion to the VC community. To put that in context, in 2021 there was $136 billion raised.

Albert Vanderlaan
So, a little bit of a difference?

Chris Weekes
A little bit of a difference. There's going to be a lot of demand. There's going to be a tremendous amount of supply. It’s not so much that “Will there be demand left over?” It’s “Will there be enough attention?” If I'm on the road pitching a $500 million to $1 billion market cap IPO and the week before or the week after, SpaceX is marketing their IPO, I think it's going to be hard. Right? I think timing will be the main difference. If you're a smaller company in this year's IPO class, you're going to need to think really hard about timing and when you go out relative to those other mega-cap IPOs.

Albert Vanderlaan
That all makes sense. One of the things we hear as a refrain from clients very often these days is: “We just don't want to be in the public markets. There's too much regulatory scrutiny, there’s too many other issues.” We're seeing a contraction in the number of companies that want to go, but there's still obviously market appetite to invest in public companies – but they're at a different phase or a different size than we've historically seen clients wanting to go out at.

Chris Weekes
I think there's been a structural shift in what types of companies are getting public. The size and sheer scale of companies going public today are massive. The problem is that the private markets are limited – it's a finite universe of investors and a finite universe of capital, and there's duration risk. We're at a point now where the scale of many of the companies that are out there can't be purchased by another private equity fund. They're just too big, and so they will go public. Investors are clamoring for that paper. The IPO market continues to be a class of securities that outperforms the market.

Albert Vanderlaan
What other alternatives are we seeing come back into favor? And I'll preface that by saying I think it's SPACs – but is that the case this time?

Chris Weekes
I think it is the case. The reality is there are two different sides of that business: there’s the SPAC IPO business – which is the vehicle itself getting public – and then there's the de-SPAC and the merger. Both are busy and both are active. There have been about 50 SPAC IPOs this year. At the peak, we saw 685 SPACs in the market seeking. We're now at 169. We're at a valuation in the public markets where SPACs play a really interesting role because when the private-to-public multiple arbitrage exists and it's wide right now, SPACs are a good tool to get public – especially if the regular way IPO market bar is extremely high, which it is right now. And there are reverse mergers, which is similar to a SPAC.

Chris Weekes
The sectors I would say that are getting the most attention continue to be quantum computing, defense technology picks and shovels around AI, nuclear, and there's a lot of activity in the autonomous space again.

Albert Vanderlaan
What other industry trends are you seeing across the board?

Chris Weekes
Well, to make a comment on those particular sectors, there's a huge difference between 2021 and today for quantum, defense tech, energy, power, and AI infrastructure. Obviously, AI has changed the world. I think Anthropic and OpenAI are growing at something like 10 times a year – their revenue. Defense tech: we talked about it a year ago and I said then that it’s going to be a boom for that industry because this administration is going to increase military budget and spending by a magnitude of probably one and a half times – and they have done that. And now we have several wars going on, and those wars are being fought in a very different way than they used to. But that happens because of the satellite communications, space communications, and a lot of drone activity. Those companies that are involved in those products, we are seeing them go public through SPACs and regular way IPOs, and they're able to raise a lot of money. Same with nuclear, right? And then it all sort of flows down cap into power utilities because there's real demand and there is a regulatory shift that is allowing and requiring those companies to now exist on a much greater scale.

Albert Vanderlaan
The nuclear regulatory piece has been fascinating. You had this regime for years at the NRC, which was a behemoth. And now all of a sudden you have a new regime with the DOE stepping in and making it much easier for these small modular reactor companies and the related fuel cell companies to get out and really try to test out new technologies that are going to be game-changing for that industry.

Chris Weekes
The Mag-7 does not exist today without the ability to find and generate power and nuclear is one piece of that. Whether you're fusion, which is a little further out, or small modular reactors. In the public market today you have Oklo, New Scale, Nano, and a number of other companies, many of which went public through SPACs back in 2021, that are now all performing incredibly well. That's all being driven by real demand for the product. I think we just need to figure out across all of these growth segments, how realistic we can get to sort of meet the valuations that are in the public markets right now with real product and real sales.

Albert Vanderlaan
Makes sense. So, to cap it off – what's your outlook for the remainder of the year? Where do we think we're going to end up – always the unfair question – for the remainder of 2026?

Chris Weekes
The drivers this year: we've got a new Fed chairman coming in May – Warsh comes in. Polymarket is suggesting there could be a 25-basis point cut in June. It’s suggesting a 50-basis point cut in September. AI will continue to be a driving force, with the mega-cap IPO. If we are able to get those out in the second half of the year, I think that will drive performance. Other than cash, there’s not a lot of places to invest your money today, and the public markets and public equities continue to be an attractive risk-weighted return. I think we probably end the year up high single digits. I think new issuance will continue to perform really well. We're already on pace to outperform last year in both IPOs and follow-ons. I'm very bullish this year. It will not come without bouts of volatility, but overall, I think equities are going to continue to be a good place to be.

Albert Vanderlaan
Well, Chris, thank you as always. Really appreciate it.

Chris Weekes
Thank you.