Private-equity firms are turning to a recovering initial public offering market to exit a backlog of nearly 33,000 unsold portfolio companies, banking on the strongest start to a year by total deal value since 2021 to clear a logjam that has weighed heavily on fundraising. The anticipated mega-listings from companies such as SpaceX, Anthropic, and OpenAI have fanned industry hopes that IPOs will once again serve as a primary exit path, reversing years of stalled sales that have stretched buyout firms thin.
U.S. IPOs raised $9.9 billion through 35 deals in the first quarter, according to specialist firm Renaissance Capital. Companies backed by private equity and venture capital helped push the median deal size to $229 million, the highest level since 2009, Renaissance said. The need to clear the nearly 33,000-investment backlog remains an immense task that has forced longer hold periods for typical multi-year buyout cycles.
A flurry of private-equity-held companies have recently registered confidentially for public offerings, including Blackstone’s sandwich chain Jersey Mike’s Subs, Roark Capital’s Inspire Brands, and Brookfield Infrastructure Partners-backed data center operator Csquare. Bankers and industry consultants say a much larger number are expected to file for IPOs in the coming months. Blackstone late last year described its IPO pipeline as among the richest in its history, and the asset manager has since listed medical-supplies distributor Medline and Blackstone Digital Infrastructure Trust.
“Private-equity sponsors have been very patient with their [portfolio companies]. Some of the [fund] investors have not,” said Mike Bellin, U.S. IPO leader at consulting firm PricewaterhouseCoopers.
“That’s part of the urgency, combined with some of the best market conditions that we’ve seen since 2021, that’s driving some of that [first-quarter] activity and the expectations for the rest of 2026 from a PE exit perspective,” Bellin said.
So far, the first quarter’s U.S. IPOs have concentrated in preferred sectors, with strong enthusiasm for artificial intelligence, aerospace and defense, energy, and biotechnology startups. But among the IPOs that have priced this year, stock performance has been mixed. Renaissance market watchers reported that shares from only four of the first quarter’s largest IPOs closed above their offer price at the quarter’s end. Neos Partners-backed energy infrastructure company Forgent Power Solutions was one of the outperformers, with its shares ending the quarter up 8% from its $27 offer price and closing at a record $54.66.
“For 2026 to really be the year of the IPO, I think we would need to see a broader-based, across-sectors pickup in activity, including from VC-backed tech, which has been notably absent,” said Matthew Kennedy, a Renaissance senior IPO market strategist. He was referring to Blackstone President Jon Gray’s April statement that 2026 will be “the year of the IPO.” Alongside Jersey Mike’s, Blackstone’s disclosed IPO plans include AI-powered digital marketer Liftoff Mobile, whose offering was back on track after being pulled in February amid a broader tech-stock selloff.
Current uncertain market conditions mean issuers, their bankers, and private-equity sponsors must be ready to accelerate, slow, or pause listing plans, consultants and bankers say. Many note the time frame for making such decisions is tighter than in past years. “Interest in going public hasn’t waned,” said Rachel Gerring, Americas IPO leader at consulting services provider EY, pointing to the unusually high level of IPO activity in January and February. But with narrower market windows that can open and close abruptly, companies are “thinking through how they can prepare so that they can take advantage of any of those market openings when they occur,” Gerring said.
For some companies, particularly those that raised money at highflying private-market valuations during the previous cycle, IPOs might require accepting a valuation haircut. Insurance technology company Ethos Technologies, which raised money from SoftBank Group in 2021 at a $2.7 billion valuation, made its public debut in January at a much lower valuation, pricing its IPO at $19 a share. The stock ended the week at $18.90, giving the company a market capitalization of just over $1 billion.
Valuation concerns have opened the door for companies to go public by merging with a special-purpose acquisition company rather than undergoing a traditional IPO. “SPACs are a vehicle in a time of volatility. They provide some valuation stabilization because…you can agree upon a valuation,” PwC’s Bellin said. SPACs backed by executives with established track records can be an attractive option for companies with hard-to-explain business models that could struggle to appeal to mass investors with a traditional IPO, Gerring said. The sector expertise some SPAC sponsors bring to the table can make negotiations more fruitful. The first quarter was the most active period for SPAC IPOs since the last three months of 2021, though merger activity by the vehicles has yet to pick up significantly.
A poorly performing IPO debut does not necessarily signal long-term failure for a listed company, Renaissance’s Kennedy said. Mobile advertising technology firm AppLovin and healthcare services company BrightSpring Health Services, both backed by KKR & Co., had underwhelming market debuts but significantly rebounded. AppLovin dropped 19% on its first day but has since soared more than sevenfold, while BrightSpring lost 15% on its debut but has since climbed to record levels, closing at $61.68 on Friday, up more than fourfold.
“The first day is just one day of many,” Kennedy said. “Don’t count out any company.”
Still, this year’s sporadic IPO comeback, he said, “kind of feels like Lucy pulling the football away from Charlie Brown.” While Kennedy expects the new-issue market will eventually return to full steam, he added: “I’m not confident that it will [happen] in the second half of the year.”