IPO Winners & Losers: SK hynix, Mega IPOs, and Hidden Volatility

Welcome back to Renaissance Capital's IPO Winners and Losers, the weekly podcast breaking down the biggest stories shaping the IPO market.

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This week:
• SK hynix raises $26.5 billion in one of the largest new listings ever
• US IPO proceeds approach 2021’s all-time record after a massive 30-day run
• AI infrastructure continues to define the 2026 IPO market
• Csquare and Standard Nuclear test demand for data centers and nuclear fuel
• IPO volatility stays high beneath a calm-looking VIX

We also discuss why SK hynix’s US listing could become a template for foreign AI supply-chain companies, why mega IPOs and AI infrastructure are driving this year’s record-setting market, and why investors still need to watch concentration risk as the IPO rebound goes global.

Transcript

SPEAKER_00 0:01

This week's winner, foreign companies in the AI supply chain. SK Heinex just proved that US markets are open for business. This week's loser, anyone still assuming IPOs have to be American to raise American money. Quick note before we dive in: this podcast is for informational purposes only, and nothing we discussed should be taken as investment advice or a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results, and one cannot invest directly in an index. For the full disclosure, check the end of this recording. So let's walk through the week because one deal reframed what's possible. I'm talking about SK Heinex, which raised $26.5 billion. Among new listings, it's the second largest equity offering ever, behind only SpaceX.

SPEAKER_01 1:05

I know, SK Heinex, big deal this week. Avery, you may have noticed, but uh my rule by now is that if I have an on-theme t-shirt, I have to wear it. And I actually do have a computer storage device t-shirt, surprisingly enough. Uh you can see that if you're watching on YouTube, but uh the floppy disk there, floppy diskette. Um anyway, back to SK Heinex. The kicker here is that this was already traded in Korea. This was a US IPO of ADS's or a cross listing, and it still popped 13%. Not bad for a first day.

SPEAKER_00 1:40

Mm-hmm. Uh and there was a stat from the newsletter that really made me pause. In 30 days, US IPOs have raised more than they did in four years. So from 2022 through 2025 combined. Um, $141 billion raised, like you mentioned, year to date, versus $16 billion this time last year. Uh, and it's pretty remarkable to see two listings of this scale essentially back to back.

SPEAKER_01 2:04

Yeah, so you know, just framing the week here, SK Heinex was really the dominant story, not just because of the size, but because it exemplifies two major themes of the 2026 IPO market, mega IPOs and AI infrastructure.

SPEAKER_00 2:18

Mm-hmm. Yeah, and getting more into SK Heinex, um, it's really not just the size, it's kind of the structure of this deal. Um, it priced at $149, a slight premium to a pretty volatile Korean share price, and then traded up about 13%. So for a large cross listing with liquid trading abroad abroad, that's impressive.

SPEAKER_01 2:38

Yeah, and this one launched when the Korean share equivalent was about $158. Uh, the shares have bounced around a lot over the last month. The pricing was interesting because normally you expect a cross listing to price at or below the home market. Uh, but in this case, it was clear that the US ADSs would likely trade at a premium to the Korean shares. And of course, it helped that the company decided to not make it easy to convert those Korean shares into US ADSs, which limits the arbitrage. Uh getting a little wonky here, but uh it's still telling that the IPU investors were willing to make the leap and purchase the ADSs at a premium. That and a pop is the surprise here.

SPEAKER_00 3:17

Which tells you demand for US listed AI supply chain exposure is deep enough to override that usual pull towards the home price, uh home exchange price. Um, and it really tells you that memory is no longer considered a commodity. Uh, and high bandwidth memory is pretty much as picks and shovels as you can get for the AI boom.

SPEAKER_01 3:37

Yeah, great to see just yet another uh AI name in the landscape here. Of course, one marquee name does not a trend make. Uh Korea has a liquid, established market. Not every foreign issuer has the same setup. So not every company's shares have uh septupled in the past year, the way that SK hinexes have done Korea.

SPEAKER_00 3:59

Yeah, no argument there. Um and yeah, it's good to see another AI name. It's like we haven't seen any this year, right?

SPEAKER_01 4:06

No, I mean it's just good for our IPO Pro AI screen, actually, is what I meant.

SPEAKER_00 4:11

Plug that. Um, but yeah, the the door didn't just open. Um, someone big walked through it and got paid. Uh, and I think that's the read that other issuers are getting right now as well.

SPEAKER_01 4:23

I'm interested to see if we get another filing from a foreign listed issuer that you know sees those American dollars and says, yeah, why not me?

SPEAKER_00 4:32

Yeah, and this brings us to a bigger theme because SK Heinex basically just stamped a label on the whole year. The newsletter puts it plainly. 2026 is officially the year of the mega IPO and the year that financed the AI revolution's infrastructure.

SPEAKER_01 4:48

Yeah, we're looking for the deal calendar to broaden to other sectors. So far, it's hard to overstate the concentration here. You know, chips, power, equipment, buildings, the actual construction of the data centers. That's where all the money's going.

SPEAKER_00 5:02

Mm-hmm. And the investor takeaway there, this isn't a tech rally in the abstract. It's a physical build-out. It's concrete and turbines and fuel and memory.

SPEAKER_01 5:14

Efficient capital market allocation, you gotta love it, at least until we start to see over-leverage and overcapacity. But for now, this is the economy's bottleneck, which is how SK Heinex becomes such a defining deal of the current market. It sits right at the intersection of both themes, mega IPO and AI infrastructure.

SPEAKER_00 5:31

Yep. Yeah. Uh so one deal, both boxes checked. Um, so looking ahead now, what's pricing next week fits this pattern perfectly, if you uh can believe it. Uh two on the docket, both AI infrastructure. Uh, we have C Square, which is a Brookfield-formed data center operator. Think Equinix or Digital Realty, but priced at a discount to those peers.

SPEAKER_01 5:56

Yeah, and for C Square, the reason if the discount matters, you've got lower margins, no dividend. Uh, unlike the others, it's not a REIT technically, not yet, and might convert later. But it's the theme investors are being asked to underwrite. Call it uh cheaper, hungrier version of what you see with some of those other companies. Also interesting to note that some of these assets were purchased out of bankruptcy uh by Brookfield a couple of years ago, and some of them came from AT ⁇ T. So, you know, taking that, packaging it together into something that, you know, it's the industry is in demand right now, makes sense.

SPEAKER_00 6:29

Mm-hmm. Yeah, and given some of the other issuers in the space we've seen this year, it's going to be a test. Do buyers pay up for the theme or do they demand the discount? So C Square will be a good signal of how disciplined the market actually is.

SPEAKER_01 6:43

And then you've got standard nuclear. Uh, this one's an early stage specialized fuel for small modular reactors. It's the pure AI power thesis, but very early stage. Interesting to see how this trades after Exit Energy got hammered this past week. Uh, but they are a unique company. Their Triso nuclear fuel is very difficult to make. So I think they they sit in a good spot. It's just uh, you know, the theme is uh really what's going to drive returns here and that sentiment around uh the nuclear and AI infrastructure power.

SPEAKER_00 7:13

Yeah, it's kind of the lottery ticket end of the same trade that we're gonna see with C Square. Um lottery tickets have not gone away. Uh nuclear fuel per reactors that mostly don't exist yet, beating data centers that need the power. So definitely speculative, like you said, but perfectly on theme.

SPEAKER_01 7:30

Yeah, and then zooming past next week, the newsletter says to expect a moderate pace in the rest of July, roughly two to four uh deals per week until the August pause. So no real slowdown, just uh a steadier cadence.

SPEAKER_00 7:43

Yeah, and it'll be good to see uh hopefully a steady flow of deals. I think our analysts will definitely be happy with that. Uh and now to the scoreboard for existing new stocks. Uh, we had a quieter week under the surface of a lot of macro headlines. Uh the IPO index closed Friday about flat, SP in 500 up 1.2%. So the index lagged the broad market this week.

SPEAKER_01 8:05

But the winners stayed on message. You've got Ingram Micro up 13.3%. That's tech distribution uh plus energy via Venture Global and the uh AI data center in Core Weave.

SPEAKER_00 8:18

Yeah, the trade is nothing if not consistent. Anything plugged into the AI build out keeps working. Distribution, power, compute.

SPEAKER_01 8:26

Yeah, and I think there was there was some concern of that last week. We started to see some volatility in that AI infrastructure play. Uh so you know, happy to see Core Weave making it on the winners list and you know, obviously supporting future deals in the pipeline. And then on the other hand, at the bottom of the IPO index this week, we had aerospace and defense with Firefly Aerospace off 16.6%. Interesting reversal from earlier in the year.

SPEAKER_00 8:53

Right. Defense was the theme for months. Uh we had those tailwinds earlier in the year from news about increased defense spending. Um, but those have pretty much died down. And it seems like investors are now starting to really scrutinize this space more. Um, looking more at uh but looking maybe more at the fundamentals of the businesses and um if they are actually actually executing the plans that they laid out. Um, but we should flag the thing under the hood. Uh the newsletter raises it directly. IPO investors are wrestling with real volatility, even though the VIX isn't showing it. Bulls and bears are in kind of uh tug of war.

SPEAKER_01 9:35

That's an important nuance. You've got uh calm headline index, but choppy underneath. The dispersion is inside the IPO market, not in the broad market fear gauge uh via the VIX. So, you know, how many of these recent listings are flipping up or down 5% on any given day? I'm seeing I'm seeing a number of them.

SPEAKER_00 9:55

When you said that, it made me think of the calls going from inside the house.

SPEAKER_01 9:58

Oh yeah.

SPEAKER_00 10:00

Um, but even though that evokes thoughts of fear, it's not necessarily a bad thing, uh, this volatility. Um it can be great for new spots, new stocks specifically, because it can kind of speed up this price discovery process. Um, CHOP has a great way of separating durable businesses from fragile ones. Um I think the point is just don't let the sleepy VIX confuse you.

SPEAKER_01 10:20

Yeah, I know that uh Bill will often call volatility the price of admission. You know, it's not a bad thing per se. Uh, but directionally, yeah, this is a market that is picking winners and losers aggressively. Uh the image in the newsletter is quite stark and sums up why we're seeing this chop. Um it's actually a pretty good image. It's got the bull and the bear during the tug of war, uh AI generated, but looks pretty good. So uh just to list out a few of these points here. On the one hand, on the bear side, you've got renewed conflict abroad. We saw that erupt this week in Iran. Uh number two, AI overspending and the rate of build-outs. That's gonna that's going to be a concern, I think, from now on. Uh uncertainty over inflation, and then uh possibility of AI disruption. I mean, we saw that earlier this year with the uh software sector. So I think these are the real fears that are uh the headlines that people can point to when the market starts to pull back. Um are we gonna reach that uh that point where we have uh earnings is really taking a hit from all of this spending on AI? Are we gonna get the the the bang for your buck there? Uh is inflation gonna creep up again? What's going on in the Middle East?

SPEAKER_00 11:30

Yeah, and then on the other hand, we have um kind of the bull points, which are corporate earnings as of right now are good. Um the US economic uh US US economy is strong. Um there's a lot of optimism over AI um and kind of tech in general. Um so there's good arguments on both sides right now. And I think, yeah, that's what's making this tug of war kind of uh a tug of war, uh kind of evenly matched. Uh so zooming out, what is this market actually telling us? Uh the US IPO market didn't just reopen, it's starting to set records, uh 30 days out raising, uh 30 days out raising for prior years, uh, and 2021's high watermark falling as soon as next week.

SPEAKER_01 12:14

Right. And of course, those records are being driven by a few large deals. We're not quite at a full IPO renaissance until we get every sector on board. Still an important deal with SK Heinex this week, which kind of globalizes the story. It's no longer just a US phenomenon. It's a almost like a magnet that's pulling the world's AI supply chain towards American listings.

SPEAKER_00 12:37

Yeah, that's a good visual. Um, and both defining themes are locked in. Uh we have mega IPOs and AI infrastructure. And everything on the calendar right now fits one or both.

SPEAKER_01 12:48

And I think that also points to the risk here, uh, kind of the same one that we keep on flagging, which is concentration. When one theme starts to carry the whole market, any AI stumble hits everything all at once.

SPEAKER_00 13:01

Yeah, that volatility below the surface is definitely the tell, uh especially when we have a VIX that is Calm. Um, underneath buyers are being very selective about which AI story they'll pay for.

SPEAKER_01 13:12

Yeah, I think selective in some cases, momentum trading in others. A lot of headline risk, but uh also some headline reward.

SPEAKER_00 13:21

All right, so what are we watching as we head into next week? Uh first, the record that's about to be reset. Proceeds should break 2021's all-time high by next week's newsletter. That's an incredible milestone.

SPEAKER_01 13:36

Next week's two deals. We've got C Square and Standard Nuclear, the discounted data center REIT, or almost read, maybe someday a REIT, and the early stage nuclear play. How they price tells us if the market is paying for the theme or demanding a deal.

SPEAKER_00 13:51

The data center pre-REAT.

SPEAKER_01 13:53

Pre-read, yeah.

SPEAKER_00 13:55

Uh yeah, and then whether SK Heinex becomes a template. Do other foreign AI names start eyeing US markets after that premium pop?

SPEAKER_01 14:04

All right, records are breaking. Buckle up.

SPEAKER_00 14:08

That's it for this week's winners and losers. Uh get the full newsletter in your inbox by clicking the link in the description. Thanks for listening. And before we go, please listen carefully to our full disclosure. This podcast is for informational purposes only. Renaissance Capital statements should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Certain of the statements contained may be statements of future expectations and other forward-looking statements that are based on Renaissance Capital's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those expressed expressed or implied in such statements. Past performance does not guarantee future results. One cannot invest directly in an index.