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IPO investors crave carve-outs with 2 more teed up after Thanksgiving

November 20, 2023

Soon after families carve up the Thanksgiving turkey, the US IPO market will see its own large carve-outs.

Spin-offs have been a recurring theme over the past couple years, and recent filings from ZEEKR (ZK) and UL Solutions (ULS) signal that the trend is set to continue. Compared to VC- or PE-backed deals, carve-out IPOs are more prevalent during challenging markets, since parent companies separate units for strategic reasons rather than timing the market, and the carved-out businesses themselves tend to be more mature.

ZEEKR, the luxury electric vehicle maker owned by Hong Kong-listed Geely (HKEx: 175), filed earlier this month for an estimated $500+ million US IPO. UL Solutions filed last week for an IPO we estimate could raise up to $1 billion, making it the largest company in the active pipeline. Since the start of last year...

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