The IPO downturn is in the 7th inning and a real pickup could arrive soon, Sixth Street CEO says

The drought in the IPO market could be near an end, according to a big investor overseeing more than $70 billion.

Alan Waxman, the CEO and co-founder of Sixth Street, believes we’re in about the seventh inning of the downturn in the IPO market as he sees a “real pickup” in the pipeline. His firm has exploded in growth, invested in everything from direct lending to growth companies to real estate to insurance to sports.

“I think people are starting to look for capital and pick on their heads up and obviously having the IPO market open a little bit of a small crack that obviously helps sort of gets commerce moving again,” Waxman said in his first-ever TV interview with CNBC’s Leslie Picker.

Sixth Street has invested in Spotify, Airbnb and Stripe through its growth strategy. Waxman believes that the market will come back to life in the fourth quarter and into the first quarter, adding that volumes will be “materially higher” in 2024 than they were in 2023.

The IPO market experienced a big lull over the past year as an aggressive Federal Reserve and recession fears diminished appetite. If interest rates stabilize and the stock market maintains its 2023 gains, investors might be open to new issuance again. Many believe the highly anticipated IPO of Softbank-backed Arm next month could be a test for sentiment.

Candidates for debuting in the fall could include Instacart, shoe maker Birkenstock, marketing automation firm Klaviyo, carsharing firm Turo and Waystar, which provides software for healthcare billing.