Coatue’s Philippe Laffont says the IPO market is broken beyond repair

Hedge fund manager Philippe Laffont has issued a stark warning about the state of the US IPO market, arguing that the ecosystem for taking companies public is significantly broken.

The founder and portfolio manager of Coatue Management said today’s market bears little resemblance to the vibrant IPO pipeline of previous decades.

“The IPO market is completely broken…it is beyond repair,” Laffont said at the CNBC Delivering Alpha conference on Thursday. “Twenty or 30 years ago, there were many more IPOs than there are today. There are very few IPOs…almost none.”

That could be a problem for ordinary investors who find themselves locked out of fast-growing companies until valuations are already steep, he said.

“I don’t think it’s a good trend because at the end of the day, it’s easier for retail investors to get involved in IPOs and subsequent IPOs than anything before the IPO,” said Laffont, whose fund manages about $70 billion in assets. Securities and Exchange Commission filings. “So I think it’s a little unfair.”

The number of IPOs in the U.S. has fallen sharply in recent years as companies choose to stay private longer. Market volatility, higher interest rates and regulatory scrutiny have also reduced risk appetite among both issuers and insurers.

But General Atlantic Chairman and CEO Bill Ford said he was more optimistic about the IPO market, even though the government shutdown affected momentum.

According to data from Renaissance Capital, there have been 191 IPOs priced in the U.S. this year; While that’s a 48% increase from last year, it’s still below levels seen from 2018 to 2021.