The Hot IPO Market Is Back on Ice as US Government Shuts Down

The US government has shut down due to Congress’ inability to agree on a spending bill on time, dampening some dealmaking activities. US IPOs in particular are now mostly on hold, with the Securities and Exchange Commission’s barebones staff focusing on market oversight and fraud prevention until operations fully resume. Depending on how long the shutdown lasts, it could halt any further IPOs for the year.

This year’s hot streak of public listings accelerated in the third quarter, and VC-backed companies like Navan, Wealthfront, and Ethos recently filed to join the action. Now their IPOs are on hold.

All public listings are reviewed and approved by the SEC, which is responsible for overseeing equity capital market transactions. In plans outlined on Monday, the agency said only a small group of employees would perform essential functions, and that it not scrutinize or approve any IPOs. Bloomberg reported that only 400 staff members out of the SEC’s 4,000 will report to work.

Only a small number of companies that have already priced their IPOs will be able to proceed, such as the FTV Capital-backed flood insurance company Neptune, which raised $368 million for its offering on Tuesday.

US IPOs just had their best quarter in years, according to PitchBook data, generating $36.4 billion in exit value—a 2,861% increase over the previous year. IPOs have generated $88.1 billion globally so far this year.

The last and longest US government shutdown began in December 2018 and lasted 35 days. This latest shutdown is the second-earliest into a president’s term in office—the earliest was a two-week shutdown which began on Sept. 30, 1977, during Jimmy Carter’s presidency.