FT : US insurers face billions in losses from Los Angeles wildfires

US insurers face billions in losses from Los Angeles wildfires
Companies had retreated from California’s market before the catastrophe struck in January

Major insurers face billions of dollars in losses from the Los Angeles wildfires, they said this week, despite dropping clients in California before the catastrophe.

AIG and Allstate are among the national insurers that warned of losses even after they cut their exposure to the state in recent years.

AIG expects losses of about $500mn from the firestorms, which destroyed more than 16,000 homes and businesses in January, the New York-based insurer said on Tuesday. That comes after a sharp pullback in 2022, when the company stopped offering new policies to most homeowners in California to focus on businesses and the richest residents of the state.

Travelers also on Tuesday said it projected $1.7bn in losses from the fires, while Zurich-based Chubb last month pegged its losses at $1.5bn. Allstate, which last week announced $1.1bn in losses, said it has more than halved its California market share since 2008.

Risk modellers say the wildfires will cost the global insurance industry about $40bn out of more than $250bn in total losses.

The widespread scope of the losses underscores the scale of the crisis in California’s insurance market, where insurers have fled as a result of tight consumer regulations and more intense natural disasters.

Insurers in recent weeks stressed they had avoided heftier payouts by paring back policies in risky areas.

“In the area where the wildfires occurred, our exposure has been reduced by over 50 per cent,” Chubb chief executive Evan Greenberg told investors last month. “We’re not going to write insurance where we cannot achieve a reasonable risk-adjusted return.”

Insurers say California’s consumer protection law has become too burdensome, preventing them from earning sufficient profits to operate in the state — ultimately leaving residents more exposed.

The average homeowners’ premium in California rose just 2.6 per cent each year between 2016 and 2023, after accounting for construction inflation, according to the reinsurance arm of UK broker Howden.


The number of policies written by California’s “admitted” insurers — which must seek approval from the state insurance department to raise rates — fell by 340,000 from 2019 to 2023, Howden’s report showed.

AIG’s roughly $500mn loss stems partly from the lightly-regulated “non-admitted” market, which is not subject to the insurance commissioner’s price regulation.

State Farm, California’s largest private insurer, is seeking an emergency 22 per cent rate increase from the state’s insurance regulator to help offset the bill from the January fires.

The California Fair Plan, a pool of private insurance set up by the state, will collect $1bn from insurers doing business in the state, the insurance commissioner said on Tuesday. Insurers, in turn, are allowed to pass on half of that assessment to their customers.

>>> US After Hours Summary: CSCO +6.8%, APP +27.7%, BROS +24.2%, HOOD +16%, MGM

After Hours Summary: CSCO +6.8%, APP +27.7%, BROS +24.2%, HOOD +16%, MGM +10.8% higher on earnings; ASPN -35%, TTD -27.3%, FSLY -20.7%, RDDT -16.2% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: APP +27.7%, BROS +24.2%, HOOD +16%, MGM +10.8%, RBBN +8.3%, ASND +7.6%, QTWO +7.4%, CSCO +6.8% (also increases dividend; increases buyback auth by $15 bln), PLMR +5.7%, SCI +5.3%, GTY +4.4%, HUBS +4.3%, AUR +4.2%, CTRE +4.1%, UPWK +3.3%, ALB +3%, CW +3%, PAYC +2.5% (also names new CFO), SUZ +2.5%, NBR +2.4%, MTW +2.1%, GLPG +1.8% (also to separate into two publicly traded entities), IRT +1.4%, RGLD +1.4%, IREN +1.2%, TYL +0.9%, WMB +0.8%, STNG +0.8%, QS +0.4%, AEIS +0.3%, CGNX +0.1%, FAF +0.1%

Companies trading higher in after hours in reaction to news: RHI +4.2% (increases dividend), RCL +2% (increases dividend by 36%; announces $1 bln share repurchase program), AMCR +1.2% (CEO bought 100K shares), AB +0.6% (reports Jan AUM), RIG +0.4% (provides quarterly fleet status report), COFS +0.2% (COFS receives regulatory approval for merger with FETM), HUBB +0.2% (authorizes new $500 mln share repurchase program), HL +0.1% (reports exploration results and mineral reserves), RDN +0.1% (increases dividend)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: ASPN -35%, TTD -27.3% (also increases buyback auth by $564 mln), FSLY -20.7%, RDDT -16.2%, GXO -10.2%, CRBG -8.5%, RPD -6.2%, CRSR -5.7% (also CEO/Founder to retire), MKSI -5.6%, PEGA -5.1%, ROL -5%, KGC -4.8%, TXG -4.8%, ATRC -4.5%, CXT -4.1% (also increases dividend), PPC -3.6%, TROX -3.3%, EQIX -2.9% (also increases dividend), CPA -2.4%, WFG -2.1%, WCN -1.9%, WH -1.9%, VECO -1.2%, AM -1.1%, MSA -0.7%, STAG -0.4%, AR -0.3%, KAI -0.3%, ARR -0.3%, EPRT -0.1%, FCPT -0.1%, SLF -0.1%

Companies trading lower in after hours in reaction to news: ATAI -19.6% ($55 mln stock offering), MGNI -4.9% (in sympathy with weak TTD results), WTTR -3% (announces progress in joint initiative to reduce freshwater usage), ROKU -2.9% (in sympathy with weak TTD results), RXRX -1.9% (files mixed shelf securities offering), CAL -1.2% (license agreement for Favorite Daughter's first shoe line), AM -1.1% (files mixed shelf securities offering), CE -0.6% (decreases dividened), CSX -0.5% (increases dividend), RNR -0.5% (stock offering by selling shareholder), AMD -0.4% (EVP & Chief Commercial Officer bought 4,645 shares), STAG -0.4% (files mixed shelf securities offering), SNAP -0.2% (in sympathy with weak TTD results), PINS -0.2% (in sympathy with weak TTD results), WDC -0.2% (provides update from Investor Day), GPI -0.1% (increases dividend)

FT : Christie’s plan for AI art auction sparks backlash from artists

Christie’s plan for AI art auction sparks backlash from artists
Creative industries worry that generative artificial intelligence models could replicate or even replace their original works

More than 3,000 artists have written to protest against plans by Christie’s to auction art created using artificial intelligence in the latest backlash by the creative industries against the threat posed by generative AI models.

In a letter to the auction house, the artists expressed “serious concern” that many of the artworks being sold were created using AI models that were known to be trained on copyrighted work without a licence. 

While many in the creative industries from music to film, media and art have no objection to the development of AI models — and often use such tools in their own work — they are worried that many of the most popular do not pay for copyrighted materials. These can be used to train AI models that can replicate or even replace the original work. 

“These models, and the companies behind them, exploit human artists, using their work without permission or payment to build commercial AI products that compete with them,” the letter said. “Your support of these models, and the people who use them, rewards and further incentivises AI companies’ mass theft of human artists’ work.”

Christie’s inaugural AI art auction, called Augmented Intelligence, claims to be the first artificial intelligence-dedicated sale at a major auction house featuring works by artists using AI models. The auction will take place in New York.

AI art is a growing area of the market, defined as any art that has been created or enhanced with AI tools. Nicole Sales Giles, director of digital art at Christie’s, said AI was “not a substitute for human creativity . . . It enhances the human spectrum of creativity”.

In response to the letter, Christie’s said that “the artists represented in this sale all have strong, existing multidisciplinary art practices, some recognised in leading museum collections. The works in this auction are using artificial intelligence to enhance their bodies of work.”

Musician and artist Ed Newton-Rex, one of the letter’s signatories and founder of Fairly Trained, a non-profit creators’ rights group, said AI companies were using other artists’ work without permission or payment, however.

“I don’t blame artists for using these. But Christie’s selling these works for tens or even hundreds of thousands of dollars is an implicit condoning of the exploitation behind the AI products involved. I find this pretty sickening at a time when so many artists are seeing their livelihoods destroyed by these very same products.”

The auction highlights the complex debate in the creative industry over AI, with artists divided about the use of AI and whether the technology will become a key tool in the creative process. Other parts of the art community have supported the sale, with some even taking the petition and creating pieces of digital art using the words and images. 

The argument over technology and art is the latest flashpoint ahead of the conclusion of a consultation into AI and creative industries by the UK government.

Under the proposals, the UK government would offer an exemption to copyright laws, letting technology companies use material ranging from music and books to media and photos to train AI models unless the rights holder objects under a “rights reservation” system.

These plans have alarmed companies across the music, film making, art and media industries given the “opt out” system could be costly and difficult to police.

>>> TradeGate Pre-Market Indications

DAX:
  • Commerzbank (CBK TH) +3.7%
    • *COMMERZBANK SEES 2025 NET PROFIT OF €2.4B AFTER RESTRUCTURING
  • Siemens (SIE TH) +3%
    • Siemens’ Revenue Rises on Growing Electrification Demand
  • BASF (BAS TH) +2.5%
    • BASF Said to Ask Banks to Pitch for Agri Chemicals Unit Listing
  • Heidelberg Materials (HEI TH) +2.4%
  • VW (VOW3 TH) +2.2%
  • Rheinmetall (RHM TH) -5.4%
    • Trump and Putin Agree to Ukraine Talks in US Policy Reversal
MDAX:
  • Delivery Hero (DHER TH) +8.4%
    • Delivery Hero to Buy Back Around €1B of Convertible Bonds
  • Thyssenkrupp (TKA TH) +2.2%
    • Thyssenkrupp 1Q Adjusted Ebit Beats Estimates
  • Kion (KGX TH) +1.7%
  • TAG Immobilien (TEG TH) +1.5%
  • TUI (TUI1 TH) +1.5%
  • Hensoldt (HAG TH) -4.5%
SDAX:
  • flatexDEGIRO (FTK TH) +1.8%
    • flatexDEGIRO Raised to Overweight at Morgan Stanley; PT 21 euros
  • KWS Saat (KWS TH) -1.7%
    • KWS Saat 1H Ebit Loss EU120.7M Vs. Loss EU102M Y/y
  • RENK Group AG (R3NK TH) -3.9%
  • Douglas AG (DOU TH) -5.4%
    • Douglas Group/Gr: Q1 2024/25 - Results Presentation

>>> Stoxx 600 Pre-Market Indications

  • Delivery Hero (DHER TH) +9.1%
    • Delivery Hero to Buy Back Around €1B of Convertible Bonds
  • DSM-Firmenich (ZX6 TH) +5.9%
    • DSM-Firmenich 4Q Adjusted Ebitda Beats Estimates
  • Legrand (LRC TH) +4.5%
    • Legrand FY Adjusted Operating Profit Beats Estimates
  • Adyen (1N8 TH) +3.9%
    • *ADYEN 2H NET REV. EU1.08B, EST. EU1.07B
  • Wienerberger (WIB TH) +3.4%
    • Wienerberger Says Will Buy Back 1%-2% of Share Capital Annually
  • Raiffeisen (RAW TH) +3%
  • Commerzbank (CBK TH) +2.8%
    • Commerzbank Vows to Boost Profits in Fight Against UniCredit (1)
  • Siemens (SIE TH) +2.8%
    • Siemens’ Revenue Rises on Growing Electrification Demand (1)
  • Andritz (AZ2 TH) +2.6%
  • K+S (SDF TH) -1%
  • Sanofi (SNW TH) -1.4%
    • Sanofi Ends Trial for E. Coli Shot and Takes a $250 Million Hit
  • Kongsberg (KOZ TH) -1.9%
  • Orange (FTE TH) -1.9%
    • Orange 4Q Ebitda After Leases Beats Estimates
  • BAT (BMT TH) -1.9%
    • BAT Sees 2025 Adjusted Operating Profit +1.5% to +2.5%
  • Shell (R6C0 TH) -2.3%
  • Saab (SDV1 TH) -2.7%
  • BAE (BSP TH) -3.3%
    • BAE SYSTEMS PLC BA. Transaction in Own Shares
  • Leonardo (FMNB TH) -3.9%
  • Rheinmetall (RHM TH) -5.4%
    • Trump and Putin Agree to Ukraine Talks in US Policy Reversal (1)

>>> Europe : Brokers Upgrades & Downgrades - 13th of February 2025

>>> Up
* Anora Group Oyj Raised to Accumulate at Inderes; PT 3.30 euros
* Avanza Raised to Overweight at Morgan Stanley; PT 370 kronor
* BCP Raised to Outperform at Mediobanca SpA; PT 59 euro cents
* Bellway Raised to Add at Peel Hunt; PT 3,000 pence
* Cytokinetics Raised to Overweight at Morgan Stanley; PT $67
* flatexDEGIRO Raised to Overweight at Morgan Stanley; PT 21 euros
* HubSpot Raised to Overweight at KeyBanc; PT $920
* Kempower Raised to Accumulate at Inderes; PT 13 euros
* Lime Technologies Raised to Buy at Pareto Securities
* Lime Technologies Raised to Buy at SEB Equities; PT 410 kronor
* DuPont de Nemours Raised to Equal-Weight at Barclays; PT $89
* Gilead Raised to Buy at DZ Bank; PT $108
* Pihlajalinna Raised to Buy at Inderes; PT 13.50 euros
* Porsche SE Raised to Hold at HSBC; PT 35 euros
* SSAB Raised to Buy at Nordea; PT 68 kronor
* STMicro Raised to Equal-Weight at Morgan Stanley; PT 22 euros
* VW Raised to Buy at HSBC; PT 125 euros
* WDP Raised to Equal-Weight at Morgan Stanley; PT 25 euros

>>> Down
* Banco BPM Cut to Neutral at Mediobanca SpA; PT 8.90 euros
* Biogen PT Cut to $144 from $175 at Stifel
* Celanese Cut to Junk by Moody’s as Prices, Volume Fall
* Entra Cut to Hold at ABG; PT 118 kroner
* Kering Cut to Sell at DZ Bank; PT 238 euros
* Medicover Cut to Hold at Deutsche Bank; PT 215 kronor
* Porsche Cut to Hold at HSBC; PT 60 euros
* Springvest Cut to Reduce at Inderes; PT 8.50 euros
* Volvo Car Cut to Hold at HSBC; PT 22 kronor

>>> Initiation
* Airtel Africa Reinstated Buy at SBG Securities; PT 134 pence
* doValue Rated New Buy at Stifel; PT 2.85 euros
* eDreams ODIGEO Rated New Market Perform at Bernstein
* GE Vernova Rated New Outperform at Baird; PT $448
* Viking Therapeutics Rated New Sector Outperform at Scotiabank
* WAG Payment Rated New Buy at Investec; PT 112 pence

>>> Call
* Saipem Strategy Update May Present Buying Opportunity, Citi Says

>>> What to look at today - 13th of February 2025

Asian equities rose as US-Russia talks spurred expectations for an end to the war in Ukraine. Risk sentiment was also stoked by the improving prospects for Chinese markets.  A gauge of equities in Asia climbed for a second day, led by shares in Japan and Hong Kong. European stock index futures gained about 1% and S&P 500 contracts also advanced. Global markets looked past the higher-than-expected US inflation figures — which eroded bets on rate cuts — with traders focusing on US President Donald Trump’s Ukraine peace talks with Russia. The euro rose versus most of its Group-of-10 peers, strengthening 0.5% against the dollar.  The upswing in risk appetite came after the Asian regional stock gauge underperformed its global peers so far this year as Trump’s tariff threats, a stronger dollar and China’s lack of domestic policy stimulus weighed on the market. Chinese equities though have been lifted in recent weeks by an artificial intelligence breakthrough. The dollar weakened against all G-10 currencies as prospects for an end to the war in Ukraine damped demand for haven assets. The Scandinavian and European currencies led the rally against the greenback. Oil extended declines after the US-Russia talks, raising speculation that risks to Russian supply may ease. Shares of aluminum producer United Co Rusal International PJSC jumped as much as 29% in Hong Kong, the biggest gain in almost three years. Asian shipping stocks fell on concern freight rates may drop.  Market sentiment got a boost from “the potential resolution of the Russia-Ukraine conflict, and the ongoing momentum in China’s tech sector,” said Charu Chanana, chief investment strategist for Saxo Markets Pte in Singapore.  Yields on 10-year US Treasuries edged down after jumping on Wednesday. Trump agreed in a phone call with Russian President Vladimir Putin to start negotiating an end to the war in Ukraine, sweeping aside three years of US policy and blindsiding European allies who feared the more conciliatory American stance amounted to a giveaway to the Russian leader. Traders’ rush to buy Chinese technology stocks for their artificial intelligence potential has put the Hang Seng Tech Index on course for its highest close since the nation’s Covid-era reopening rally. The frenzy over Chinese artificial intelligence is turning Alibaba Group Holding Ltd. into an investor favorite again with its Hong Kong-listed shares surging 46% since hitting a 2025 low on Jan. 13. On Wednesday, Treasuries fell across the curve as investors adjusted expectations for Fed cuts following the inflation reading. The moves were mainly centered upon the higher-than-expected rise in US prices, which led traders to adjust bets on US rate cuts to now project the first and only reduction this year to come in December. Gold held a rally from its previous session, inching back toward its record high achieved earlier this week. US After Hours CSCO +6.8%, APP +27.7%, BROS +24.2%, HOOD +16%, MGM +10.8% higher on earnings; ASPN -35%, TTD -27.3%, FSLY -20.7%, RDDT -16.2% lower on earnings

Nikkei +1.28% Hang Seng +1.89% CSI -0.14% Shanghai -0.20% Shenzen -0.50%

Eur$ 1.0426 CNH 7.2921 CNY 7.2911 JPY 154.04 GBP 1.2490 CHF 0.9112 RUB 93.0081 +1.07% TRY 36.1115 WTI$ 70.70 -0.94% Gold 2,916 +0.41% BTC 96,000 -1.70% ETH 6,685 +0.07%

S&P +0.21% Nasdaq +0.43% EuroStoxx +0.98% FTSE +0.15% Dax +1.07% SMI

Macro :
- Secretive Hedge Fund QRT Storms $4.5 Trillion Industry’s Elite
- Qatar Wealth Fund Backs London-Based Venture Capital Firm Utopia

Keep an eye on :
- ADYEN NA : Adyen 2H Net Revenue Beats Estimates (2)
- ALFEN NA : Alfen 2025 Revenue Forecast Misses Estimates
- ARCAD NA : Arcadis 4Q Net Revenue EU959M Vs. EU941M Y/y
- ARGEO NO : Argeo Offers Up to NOK96 million Shares
- BAMNB NA : BAM Sees 2025 Adjusted Ebitda Margin About 5%
- BAS GY : BASF Said to Ask Banks to Pitch for Agri Chemicals Unit Listing
- BDT GY : Bertrandt 1Q Ebit Loss EU2.14B Vs. Profit EU13.5M Y/y
- BCVN SW : BC Vaudoise FY Net Income CHF441M
- BELL SW : Bell FY Ebitda Meets Estimates
- BNP FP : BNP Paribas, BPCE to Create Payment Processing JV: Les Echos
- BA US : Trump Says ‘Not Happy’ With Boeing Plane ‘Service We’re Getting’
- CE US : Celanese Cut to Junk by Moody’s on Slow Global Demand Recovery
- CRI FP : Chargeurs FY Ebitda Beats Estimates
- CBG LN : Close Brothers Sees £165 Million Provision for Car-Loan Saga (2)
- CBK GY ; Commerzbank Sees 2025 Net Profit of €2.4B After Restructuring (1)
- ACA FP : Credit Agricole Italia Board Proposes Hugues Brasseur as CEO
- DEME BB : DEME Doesn’t Know Why Argentina River Dredging Auction Failed
- DSFIR NA : DSM-Firmenich 4Q Adjusted Ebitda Beats Estimates
- FGR FP : Eiffage Consortium Wins Bordeaux University Hospital Contract
- EMBRACB SS : Embracer 3Q Net Sales SEK7.36B
- EL FP : EssilorLuxottica Sales Beat Estimates on Ray-Ban Meta, Supreme
- Ferrari Group IPO : Ferrari Group IPO Priced at €8.60/Share, Terms Show
- FLOW NA : Flow Traders 4Q Net Trading Income Beats Estimates
- FRA GY : Fraport Jan. Frankfurt Airport Passengers -3.1%
- GMAB DC : Genmab Sees 2025 Revenue of $3.34b to $3.66b (1)
- HFG GY : Hellofresh Top Shareholder Wants Up to €560m in Cost Cuts: WiWo
- HTG GY : HomeToGo Offers 53.1m Shares at EU1.60/Share: Terms
- HUBS US : HubSpot 1Q Adjusted EPS Forecast Misses Estimates
- IPN FP : Ipsen FY Core Operating Profit Beats Estimates
- KBC BB : KBC Sees 2025 Net Interest Income at Least EU5.7B, Est. EU5.62B
- LI FP : Klepierre Sees 2025 Group NCCF/Shr EU2.60 to EU2.65
- LR FP : Legrand FY Adjusted Operating Profit Beats Estimates
- MANTA FH : Mandatum 4Q Pretax Profit Beats Estimates
- MEKO SS : Meko 4Q Ebit SEK127M Vs. SEK68M Y/y
- MERY FP : Mercialys FY Recurring Net Income Meets Estimates
- ML FP : Michelin FY Total Segment Operating Income Beats Estimates, Michelin Sees Tough Tire Market Persisting on Muted Auto Demand
- Novo banco : Novo Banco to Start Procedure for Initial Public Offering
- ORA FP : Orange’s Sales Meet Analysts’ Estimates on Growth in Africa
- PCELL SS : PowerCell 4Q Sales SEK144.1M Vs. SEK127.5M Y/y
- QTCOM FH : QT Group Sees 2025 Net Sales +15% to +25%
- RAIVV FH : Raisio 4Q Adjusted EPS Matches Estimates
- RNO FP : Honda, Nissan Officially Call Off Talks to Combine (1)
- ROG SW : Roche’s Genentech’s Evrysdi Tablet for SMA Gets FDA Approval
- NAS NO : Norwegian Air 4Q Ebit Loss NOK93.2M, Est. Profit NOK171.5M
- NESN SW : Nestle Sees 2025 Underlying Trading Oper Margin at Least 16% (1)
- NOKIA FH: Taiwan FTC Approves Nokia’s Acquisition of Infinera
- SAVE SS : Nordnet Says 1,500 Customers Hit by Security Breach, DI Reports
- ORK NO :
- RXL FP : Rexel Sees 2025 Adjusted Ebita Margin About 6%
- SAN FP : Sanofi Ends E. Coli Vaccine Study, Records $250M Hit in 4Q24
- SINCH SS : Sinch Records SEK700m One-Time Provision After Tax Revision
- SCMN Sw : Swisscom FY Net Revenue Meets Estimates, Swisscom Sees 2025 Net Revenue About CHF15.0B to CHF15.2B
- STR AV : Strabag Sees 2025 Ebit Margin at Least 4.5%, Output at €21b (1)
- SIE GY : Siemens 1Q Industrial Business Profit Beats Estimates
- STORB SS : Storskogen 4Q Sales Miss Estimates
- TTK GY : Takkt Proposes €0.60/Shr Div., Reached Upper End of FY24 Goals
- TIT IM : Telecom Italia 4Q Organic Revenue Meets Estimates
- TFI FP : TF1 FY Current Operating Income Beats Estimates
- TKA GY : Thyssenkrupp 1Q Adjusted Ebit Beats Estimates, Thyssenkrupp Raises Guidance After Major Naval Order Payment
- UCG IM : *DELFIN CHAIR TO SOLE: NO DECISION ON UNICREDIT STAKE
- X US : Nippon Steel Meeting With Trump Seen Next Week or Later: Asahi
- URW FP : Unibail 2025 Adjusted Recurring EPS Forecast Misses Estimates
- VEI NO : Veidekke 4Q Revenue Meets Estimates
- VIMIAN SS : Vimian 4Q Revenue Beats Estimates
- VOW GY : VW, Audi Consider Extending Combustion Engine Models to 2035: HB
- WIE AV : Wienerberger Says Will Buy Back 1%-2% of Share Capital Annually

FT : Buyout group Thoma Bravo set for $4bn windfall after SailPoint IPO

Buyout group Thoma Bravo set for $4bn windfall after SailPoint IPO
Bankers expect flurry of listings on back of buoyant stock markets and easing financial conditions

Cybersecurity specialist SailPoint’s initial public offering is poised to hand investors a multibillion-dollar windfall from a private equity deal struck at the height of a record wave of takeovers in 2021 and 2022.

US private equity group Thoma Bravo stands to make more than $4bn from the IPO, which is expected to value the Texas-based company at more than $12bn.

The sum would represent a large paper gain from a takeover many private equity investors had worried was struck at a sky-high valuation that would be weighed down by falling tech valuations.

Thoma Bravo paid $6.9bn for SailPoint in April 2022, about 15 times annual sales for a company that was barely profitable at the time.

Fears about the deal’s lofty valuation were accentuated by surging inflation in 2022 that forced the Federal Reserve to raise interest rates to more than 5 per cent.

The markedly different environment wreaked havoc on the private equity industry, which has returned minimal amounts of cash to its investors in recent years as markets for new listings have seized up and merger activity has slowed.

Many analysts expected private equity groups such as Thoma Bravo, which manages $160bn in assets and was among the most active dealmakers in 2021, would be forced to hold their investments for longer to justify their purchase price. SailPoint’s annualised recurring revenues have roughly doubled to more than $800mn since Thoma Bravo’s buyout, according to filings.

Thoma Bravo used about $6bn of its investors’ cash to buy SailPoint. In December 2024, it invested a further $600mn to pay down SailPoint’s debt in an effort to increase the company’s appeal to shareholders. The deal raised Thoma Bravo’s overall equity investment to $6.6bn.

SailPoint stock is being offered to investors at $23 a share, according to Bloomberg, up from a range of $19 to $21. At SailPoint’s new price range, Thoma Bravo’s gains stand to be more than $4bn.

However, since it is not selling stock as part of the offering, the windfall has not been realised and will be exposed to SailPoint’s performance on public markets.

SailPoint will use proceeds of more than $1bn to repay virtually all of its outstanding debt. The IPO has attracted anchor investors Dragoneer Investment Group and AllianceBernstein, which will purchase about 20 per cent of the offering. 

Buoyant stock markets and easing financial conditions mean bankers expect a flurry of listings in the coming months, driven in part by private equity groups looking to offload some of their biggest holdings acquired when interest rates were close to zero.

But the year has begun slowly for dealmaking and IPOs. Shares in US liquid natural gas exporter Venture Global, for instance, are down almost 40 per cent since the company’s debut in mid-January.

SailPoint’s IPO is being closely watched as a useful gauge of investor appetite for tech listings after DeepSeek’s cut-price artificial intelligence breakthrough stunned markets last month.

“Everyone was expecting the market to be fabulous under a Republican administration, but it hasn’t gone to plan so far,” said a person close to the IPO for space and defence contractor Karman Holdings, which is also expected to start trading this week.

Karman has set a valuation range of $18 to $20 a share for a $400mn IPO, implying a fully diluted market capitalisation of $2.5bn.