Company Spinoffs Help Fill U.S. Market’s IPO Void
Mar 23, 2022
A flow of corporate spinoffs is providing some much-needed activity in U.S. equity capital markets, as companies look to slim down or unlock value in parts of their businesses. The prospective transactions are shaping up as a rare source of new share sales in the U.S. An extended stretch of market volatility is quashing companies’ appetite for initial public listings, leading to the longest drought in more than a decade.
The trend also comes against a backdrop of soaring long-term interest rates, with Federal Reserve officials signaling they could start tightening policy more aggressively to battle elevated inflation. So for companies, the rising cost of capital is a major part of the decision-making process that is making spinoffs more appealing.