Government shutdown threatens to stall the recovery in the IPO market

NEW YORK (AP) — The U.S. government shutdown is waving a caution flag at private companies racing to make the move to the public market.

The market for initial public offerings has been on a years-long recovery after spiking inflation slammed the brakes on activity in 2022. The IPO market is already on track for its best year since 2021 with 163 deals and $31 billion in proceeds raised so far, according to Renaissance Capital.

Companies rely on the U.S. government, through the Securities and Exchange Commission, to review and approve IPO filings, while monitoring the ongoing process. The SEC is now operating with minimal staff, significantly delaying or halting those reviews and approvals.

Investors and companies are dealing with more than just technical issues. A prolonged government shutdown could sap confidence in the U.S. markets and economy. IPO activity typically remains strong through October, then slows in the U.S. during the final two months of the year.

“That’s always an end of the year factor,” said Samuel Kerr, head of global equity capital markets at Mergermarket.

Investors and companies had been mostly brushing off much of the uncertainty roiling the U.S. government and economy through the year, including an unpredictable trade policy, ongoing worries about inflation, a weakening job market and questions about Federal Reserve policy. Amid all that, the stock market has notched record after record and new companies keep joining the ranks.

The impasse in Washington, though, has brought a reminder of the challenges facing the market.

“It (the shutdown) reminds you that we’re not operating in normal times,” Kerr said.

Investors have been drawn to IPOs because stocks have looked pricey for a while, especially in the technology sector, leaving them looking for other ways to get into the market. IPOs have offered a way to do that. Many of the bigger IPOs in 2025 have been in growing technology fields, including cryptocurrency technology and artificial intelligence.

Circle Internet Group, the U.S.-based issuer of one of the most popular cryptocurrencies made its public debut in June for about $1.1 billion.

Circle issues USDC, a stablecoin that can be traded at a 1-to-1 ratio for U.S. dollars, and EURC, which can similarly be traded for euros. It’s shares priced at $31, soared on the first day of trading and currently trade for around $152.

Cryptocurrency exchange Bullish raised about $1.1 billion in August. Cloud-computing company CoreWeave raised about $1.5 billion when it went public in March.

Klarna, the Swedish buy now, pay later company, entered the public market in September, raising $1.37 billion. That made it the largest IPO of the year, according to Renaissance Capital. The IPO priced at $40 and shares currently trade around $42.

Outside of the shutdown, market conditions remain ideal, said Bill Smith, CEO of Renaissance Capital, in a note to investors.

“The IPO market still has a bit of gas in the tank,” he said.