U.S. funds set aside cash as SpaceX and OpenAI prepare to go public, analysts say
Large mutual funds and passive index funds are preparing for significant IPOs from companies like SpaceX and OpenAI. Analysts note that these upcoming listings may lead to existing holdings being sold off to accommodate new investments. The potential for these IPOs is heightened by new rules in major indexes that facilitate quicker inclusion of newly public companies.
- ▪Mutual funds are increasing cash reserves in anticipation of major IPOs.
- ▪SpaceX is targeting a valuation of around $1.75 trillion for its IPO.
- ▪OpenAI could seek a valuation of about $1 trillion or more at its listing.
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ShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountLarge mutual funds and passive index funds are starting to set aside more cash and preparing to offload some of their existing holdings in large-cap stocks, as they prepare to add upcoming blockbuster IPOs like SpaceX and OpenAI to their portfolios. For passive funds, the potential inclusion of newly public companies could force them to sell down existing holdings in other large-cap stocks, said John Flood, managing director, Global Banking & Markets, FICC & Equities at Goldman Sachs, in a May 22 note to clients.“Investors are increasingly focused on the impact of potential large IPOs in the pipeline. Ahead of each of the four largest IPOs during the past few decades, U.S.
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