SpaceX, OpenAI, Anthropic IPOs Drive Work to Big Law Practices

Blockbuster IPOs planned by Anthropic, OpenAI and SpaceX are encouraging a growing list of companies to consider public listings, bolstering Big Law capital markets practices.

Lawyers see an uptick in interest among public markets clients, with some in registration with the US Securities and Exchange Commission and others reviewing the possibility of initial public offerings. Potential IPOs are germinating in tech, insurance, energy, infrastructure and healthcare, they say.

“The market is definitely open,” said Ian Schuman, global chair of Latham’s capital markets and public company representation practices. “A good showing by some of these larger deals, especially marquee names, is going to accelerate things.”

The renewed interest in IPOs is a welcome change for major law firms after years of hesitation by companies that were discouraged with market volatility and interest rates edging higher. Standout results help drive momentum—Liftoff Mobile Inc., a Blackstone-backed mobile advertising company, shares rose 21% in its debut after raising $437 million in an IPO, Bloomberg News reported Thursday.

Companies are “pushing everything further forward so as to take advantage of this business cycle,” said Schuman, whose firm advised on the biggest IPO so far this year, helping Cerebras Systems Inc. raise $5.5 billion. “I feel fairly confident what you’re going to see is an acceleration of timelines.”

SpaceX is targeting a valuation of nearly $1.8 trillion in one of the most closely watched public listings globally. OpenAI and Anthropic PBC are expected to go public this fall, following SpaceX.

Read More: SpaceX Details Big Legal Fees as IPO Proceeds

Canva Inc., Ramp and Databricks are among other companies where top executives have voiced interest in selling shares to the public though haven’t committed to specific timelines, Bloomberg has reported.

“We are working with numerous large clients actively preparing to go public,” said Thomas Ivey, who heads the M&A corporate group in Palo Alto, California for Skadden, Arps, Slate, Meagher & Flom. He declined to name clients, though the firm said they are “across all industries,” including tech, fintech and crypto, insurance, mining, consumer and healthcare.

IPO Rebound

Global IPO volumes reached $45 billion in the first quarter, up 40% from the same quarter a year earlier, according to Dealogic. The $23.7 billion in US IPOs in the first quarter were approaching the full-year totals of 2022 and 2023.

Big Law is seeing the most traction in areas that require huge pools of money, such as businesses built around infrastructure-scale computing, energy usage, hardware deployment and long-term R&D cycles, rather than asset-light software models that have historically dominated later stage tech listings.

“All of these data centers need power,” said Jackson O’Maley, a capital markets partner at Vinson & Elkins in Houston. “If you’re going to build out a transmission system that’s going to supply power to a data center, or you’re going to drill dozens of geothermal wells—those require a lot of capital.”

V&E capital markets lawyers are set to represent issuers and underwriters in multiple IPOs in the energy, power, infrastructure, and other sectors, O’Maley said, saying he couldn’t discuss details of client matters.

While mega IPOs are attracting enormous attention, lawyers at Skadden are also seeing related activity across convertible bonds, investment-grade debt, high-yield debt and other capital markets products. “The need for capital to fund AI, infrastructure and technology investment is a major theme,” said Ryan Dzierniejko, the global head of Skadden’s capital markets practice.

Blockbuster Listings

The aftermath of the upcoming blockbuster listings will play into other companies’ decisions on whether to move forward, Dzierniejko said.

“Large, high-profile offerings can influence market sentiment and encourage activity,” he said. “But they can also lead to a more cautionary environment if pricing or aftermarket performance disappoints.”

Gibson, Dunn & Crutcher is advising SpaceX on what could become the largest initial public offering in history. Cooley LLP and Wachtell, Lipton, Rosen & Katz are helping to prepare OpenAI’s IPO, and Anthropic tapped Wilson Sonsini Goodrich & Rosati to guide its public listing.

Davis Polk advised the representatives of several underwriters as AI chipmaker Cerebras went public in May. Vinson & Elkins and Latham worked on a pair of public offerings in the same month: Fervo Energy Co., a geothermal power producer, raised $1.9 billion in its IPO to scale geothermal power, while EagleRock Land LLC raised $320 million to develop surface land rights in the oil-rich Permian Basin in West Texas.

“The IPO market is much broader than just one or two themes,” Arnaud Blanchard, global co-head of equity capital markets at Morgan Stanley wrote May 27. “There is strong demand from a diverse investor base: Growth investors, value investors, income-focused investors and sector specialists—all contributing to demand.”