The U.S. IPO Market Needs Saving. Could Paul Atkins Be the Answer?
Trump’s nominee for SEC chair has been critical of regulatory burdens for public companies
Wall Street is holding out for a hero to revive a beleaguered IPO market. Enter Paul Atkins, President Trump’s nominee to lead the Securities and Exchange Commission.
Investors are hopeful that the agency’s next chairman will ease regulatory burdens for publicly traded companies and help spark a rebound in stock-market debuts. Former SEC Chair Gary Gensler was viewed by bankers as an impediment to the U.S. market for initial public offerings, given his penchant for enforcement actions and support for tighter disclosure rules on a range of corporate issues.
“It’s part excitement, and it’s also part relief,” said Jim Toes, president and CEO of the trade group Security Traders Association. “The most recent chair did very little in this role to encourage companies to go public.”
Atkins is a conservative lawyer who served as a Republican member of the SEC under former President George W. Bush. If confirmed as the new chair, he is expected to re-examine the agency’s actions during the Biden administration.
Just how much he and the SEC can do to reverse a decadeslong trend of fewer companies listing on public markets is unclear. Sharp stock market swings—such as those in the first weeks of Trump’s presidency—are also bad for IPOs because they make valuing companies tricky.
U.S. companies raised just $32 billion in traditional IPOs in 2024, well below the 10-year average of around $49 billion, according to data from Dealogic. There were fewer than 4,000 publicly traded companies in the country last year, down from more than 7,000 in 1998, according to the Center for Research in Security Prices.
Access to seemingly endless investor cash and concerns about the costs of public listings have kept companies private longer. The Federal Reserve’s interest-rate hikes during the pandemic also put a huge damper on new listings.
“Many of the rules that we’ve done over the past four years, there have been burdens associated that one worries at the margin could have a negative effect on companies’ willingness to go public,” said acting SEC chair Mark Uyeda in an interview last month.
Atkins has yet to reveal any specific plans for the SEC. His confirmation is expected to take place this month, though he may not step into the role until March, according to people close to the situation. But he has also cited factors creating an unfriendly environment for discouraging companies from going public.
“One is the cost of regulation and two, other things like the fear of litigation,” he said in a 2017 interview on Bloomberg TV.
A hallmark of Gensler’s tenure at the SEC was his targeting of crypto companies, which he sought to regulate more closely. Gensler also pursued legal actions that led to billions of dollars in fines for other companies.
The SEC won’t be able to enact sweeping changes without new legislation. But some bankers are hopeful the agency will take steps to make it more appealing for companies to go public.
For instance, the SEC could look at reducing disclosure requirements in areas such as stock buybacks and financial risks from climate change. The agency is also expected to ease restrictions on special-purpose acquisition companies, or SPACs. These firms boomed during 2020 and 2021, but increased scrutiny from the SEC effectively shut down the market.
For now, bankers have been tempering their hopes for an IPO market comeback in 2025.
Trump’s tariffs are fueling uncertainty over how much more inflation and interest rates might come down this year.
Last month, Venture Global cut the target price for its IPO by more than 40% due to muted investor demand. Shares of pork producer Smithfield Foods also got a tepid reception.
“Given macroeconomic forces, I’m not sure someone new at the top job at the SEC lights the match for a flaming IPO market this year,” said David Peinsipp, co-chair of Cooley’s global capital markets group.