Nasdaq’s Friedman Sees IPO Revival Led by Digital Innovators

(Bloomberg) -- Even with falling equity prices and delayed initial public offerings, some companies are still looking to make their stock-market debuts, Nasdaq Inc. Chief Executive Officer Adena Friedman said.

After more than 750 IPOs last year, Nasdaq’s exchange had just 70 such offerings in the first quarter, with closely held companies “staying on the sidelines” this quarter, Friedman said in a Bloomberg Television interview Wednesday. There’s a pipeline of more than 250 companies with S-1 filings looking to go public on the Nasdaq in coming months and quarters, she said.

“There are some companies that hope to tap the public markets this quarter,” though volatility is likely to delay those IPOs, Friedman said. “The companies that have been really eager to tap the public markets are those that are really leaning into the digitization of the economy, those that are leaning into providing new technologies to help get to a net-zero environment -- those type of innovators that we see coming to Nasdaq every year.”

Nasdaq, the second-largest stock exchange in the U.S., bills itself as a technology company. Beyond running the exchange, the New York-based firm offers data, analytics, software and other surveillance services to clients including publicly traded and closely held companies and investors.

Amid a booming stock market and pandemic-driven volatility that increased trading volumes, Nasdaq’s revenue grew to $3.42 billion last year, up 18% from 2020. But with soaring inflation, rising interest rates and a fraught geopolitical environment, investor concerns are growing, and the tech-focused Nasdaq Composite Index is down more than 20% this year, compared with a 13% decline for the S&P 500.

Friedman, who has been CEO of Nasdaq since 2017, has focused on diversifying the company’s revenue stream to make it less reliant on the market for growth. The firm has invested in technology, data and other offerings beyond the exchange where shares in public companies trade.

The company has leveraged its technology to support companies in other industries, including crypto. Nasdaq is interested in partnerships with other firms in the field, but is taking a cautious approach because of questions around regulation. 

“As we evaluate the regulatory environment and how many institutions want to get into the space, we are actively evaluating how we can play a role,” Friedman said in an additional interview with Bloomberg. “More and more institutional investment is coming into the general digital-asset space, including crypto, but the level of inefficiency is incredible. That is where we will play a role.” 

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