Tech • AI • Robotics
Rush to Go Public: But Where Do the Billions Really Come From?
7/10TL;DR
Large IPOs are increasingly driven by retirement savings, insurers, fund mandates and index mechanics rather than immediate profitability or classic stock-picking.
KEY POINTS
Institutional money dominates IPO demand
In the United States, the main fuel for major listings often comes from retirement savings plans such as 401(k) accounts, alongside retail investors and large asset managers. In France, comparable demand is more likely to come from funds managing life insurance assets rather than pension capitalization, helping explain why French IPOs are generally far smaller than US deals.
Big listings are set up before the first trading day
Modern IPOs are largely allocated in advance through banks that canvass fund managers before listing. Those investors indicate how much they want to buy in companies such as SpaceX, Anthropic, Revolut or CMA CGM, allowing much of the deal to be structured well before public trading begins.
Headline oversubscription can be misleading
Claims that an IPO was subscribed 10 times over do not necessarily mean there was ten times more firm demand than available shares. Fund managers often ask for more stock than they realistically expect to receive, much like overbooking, so the final oversubscription figure may exaggerate the depth of committed buying.
Mandates and regulation shape buying decisions
A significant share of demand is linked to portfolio rules, risk constraints and increasingly broad ESG and compliance frameworks. Many funds buy because their mandates require exposure to certain categories of assets, not simply because they have made a conviction call on a company’s business model or near-term profits.
Index inclusion can create forced buying
Once a newly listed company enters an index, ETFs and index-tracking funds must buy shares to match the benchmark. That can push prices up regardless of fundamentals, especially when investors anticipate inclusion and buy ahead of the formal date, leaving passive vehicles to purchase at elevated levels and helping stabilize the post-IPO price.
An IPO behaves differently from an established stock
The first year after listing should not be read like the trading pattern of mature groups such as LVMH, Apple or Nvidia, where earnings, cash flow and guidance drive valuations. For a new listing, political approval, regulatory treatment, allocation rules and index mechanics can matter more than operating performance in the early stages.
French deals are smaller and sometimes highly financialized
In France, a deal raising €1 billion is already considered large, while €200 million to €500 million is more common. One example was Mediawan, which raised about €250 million on Euronext despite starting as a cash shell designed to acquire assets later, illustrating how institutional capital can back a structure before its operating business is fully built.
Some large private companies avoid listing for strategic reasons
Transport and commodity groups often stay private because market sensitivity to geopolitical events can be brutal. A listed shipping operator such as CMA CGM could face immediate share price shocks from disruptions around key chokepoints such as the Strait of Hormuz, making private ownership more attractive.
Politics and authorization are becoming more important
The current market structure gives growing weight to regulation, approvals and gatekeeping power. As AI spreads and operational capabilities become more standardized, the ability to authorize, restrict or classify activity may become one of the most decisive forces in capital markets, especially for high-profile IPO candidates.
CONCLUSION
The current IPO market is less a pure referendum on business quality than a system shaped by institutional mandates, passive investing and regulation. That shift is likely to define the next wave of large US and European listings.
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