The IPO market came into 2026 with a lot of optimism. After a few years of very slim pickings, it felt like conditions were finally lining up for a more sustained rebound. Instead, the first quarter delivered a familiar reminder that IPO markets don’t move in straight lines.
Volatility surged early in the year as markets grappled with a tech selloff, renewed tariff noise, private credit concerns, and rising geopolitical tensions in the Middle East. Not surprisingly, new issuance slowed after a strong start.
According to Renaissance Capital, 34 companies came public in Q1, raising just under $10 billion. Deal count slipped, but proceeds were supported by larger, higher‑quality offerings, including Forgent (FPS), an electrical equipment maker that raised over $1 billion.
It’s important to recognize that the IPO window didn’t slam shut – it just narrowed. And what squeezed through that narrower window tells us a lot about where investors are willing to put money to work in a market where oil prices, geopolitics, and inflation expectations have combined to create noisy headlines.
Against that messy backdrop, investors have become much more selective – and that selectivity showed up clearly in the IPO market.
[text_ad]
What Worked for IPOs in Q1 (And What Didn’t)
One of the most interesting takeaways from Renaissance’s quarterly review is where investors were still willing to commit capital. The prior tech‑led IPO revival faded quickly as valuation multiples compressed and fears around AI‑driven disruption intensified. But investors didn’t abandon growth altogether.
Instead, capital gravitated toward businesses outside of the AI hype cycle, particularly industrial companies, power and electrical infrastructure, and select healthcare names. These are businesses tied to physical assets, long‑dated investment cycles, and visible demand drivers that don’t depend on the next upturn in software multiples.
Larger IPOs – those raising more than $100 million – managed modest average gains of about 3% from their offer prices, even as the Renaissance IPO Index finished the quarter down and underperformed the S&P 500.
Clearly, this isn’t a roaring bull market. But the evidence does show that solid businesses can still go public and hold their ground when markets get wonky.
2 Recent IPOs That Fit the Playbook
This shift toward industrial and infrastructure leadership isn’t new, and it’s something I’ve been focused on in Cabot Early Opportunities for some time.
Two good examples are portfolio holdings Atmus Filtration Technologies (ATMU) and GE Vernova (GEV), both of which came public in the past couple of years.
Atmus Filtration, which was spun out of Cummins in 2023, operates squarely in the industrial filtration space. It’s not flashy. But it sits at the intersection of emissions regulation, efficiency improvements, and global industrial demand. It’s precisely the kind of business that keeps doing its job regardless of whether markets are in risk‑on or risk‑off mode.
GE Vernova, which debuted in 2024, is even more directly tied to today’s leadership themes. The company is a pure play on power generation, grid modernization, and electrification – all areas that are seeing massive investment as energy systems are rebuilt and expanded.
Together, these two businesses illustrate the type of companies that have come public in recent years – and have worked – even when IPO conditions are uneven. They are businesses with real assets, long visibility, and exposure to powerful secular trends.
That same profile is what underwriters appeared to lean into in Q1, and it may provide a useful guide for what could work in Q2.
Why This Matters for Investors
A healthy IPO market isn’t just about flashy new ticker symbols. It expands the opportunity set. It signals investor risk appetite. And it often coincides with increased M&A and corporate carve‑outs, which create additional ways to identify future market leaders.
The keyword is healthy. The frothy IPO market of 2021 produced a lot of new names – and a lot of disappointment. What we’re seeing now is very different. This is a market where companies have had to earn investor interest, and where leadership is emerging in areas tied to real‑world investment cycles.
That’s a constructive setup, even if the broader IPO rebound has been delayed again.
How I’m Positioning in This Market
Against this backdrop, my approach in Cabot Early Opportunities isn’t changing. We’re trying to stay aligned with strength, avoid broken charts, and focus new money on businesses with visible growth drivers, improving fundamentals, and strong trendlines.
This month’s issue, which was just published on Wednesday, leans directly into that idea. It features three high‑conviction companies tied to electrification, energy infrastructure, and global investment themes – the same areas that are holding up best in the IPO and broader equity market.
If you’d like to see how I’m managing our portfolio right now, you can learn more here.
[author_ad]
