(Bloomberg) -- Smith Douglas Homes Corp. rallied during its Thursday debut to deliver a much-needed boost to the nascent market for initial public offerings after one of the worst years for US exchanges since the 2008 financial crisis.

The Georgia-based homebuilder marked the year’s first notable IPO on a US exchange as Wall Street readies a pipeline of household names held by investors itching for a chance to exit. Shares jumped as much as 17% after the company priced the nearly $162 million IPO at the top of its marketed range.

Smith Douglas Homes started trading as bankers and investors anticipate a rebound in 2024 after a dearth of offerings resulted in global IPOs posting their slowest year in more than a decade. Wilson tennis racket maker Amer Sports Inc. and KKR & Co.-backed BrightSpring Health Services Inc. also joined the queue for planned public offerings after submitting their filings this month.

“If the everyday company worth $1 billion to $5 billion can come out and have a successful offering and perform in the aftermarket, that’d be a great thing for the more mainstream IPO market,” said David DiPietro, head of private equity at T. Rowe Price. Successful IPOs by five or six midsize companies driven by fundamentals would help set the tone for this year, DiPietro said.

Shares of Woodstock, Georgia-based Smith Douglas Homes opened at $23.50 after selling for $21 in the IP0. The shares rose 14% to $24 in New York trading, giving the company a market value of more than $1.2 billion. The company, which will continue to be controlled by its founding family, delivered home-closing revenue of nearly $595 million for the nine months ended Sept. 30, according to its filing.

Welcome Signal

The debut may be a welcome signal to other companies that have been eyeing a more receptive IPO market. The pipeline of potential debutants includes Reddit Inc., Syngenta Group and CVC Capital Partners — many of which have been rumored to be targeting public listings since 2021. Admittedly, they don’t have much in common with Smith Douglas Homes.

The company’s nearly $162 million offering would have been among the 35 largest in 2023, a year that saw just $26 billion raised on US exchanges. The handful of offerings in the final months of the year were mixed, failing to spark a steady stream of new entrants.

The offering was led by JPMorgan Chase & Co., Bank of America Corp., RBC Capital Markets and Wells Fargo & Co. The company’s shares are trading on the New York Stock Exchange under the symbol SDHC.

Others who had been weighing a listing in recent years are considering to make a move this year, including stablecoin issuer Circle Internet Financial Ltd., which said it has confidentially submitted plans for an IPO. Shein Group Ltd. and General Atlantic Service Co. LP are among the companies that are preparing an IPO as early as this year, Bloomberg News has reported.

Fundamentals Firming Up

With the S&P 500 Index sitting just 1% off a record high as investors bet the Federal Reserve will swiftly cut interest rates, the fundamentals for a return of IPOs are firming up. However, that doesn’t mean money managers will buy just any company after getting burned in 2020 and 2021.

“Investors are going to be quite selective and will need a very solid case for future projections,” said DiPietro. “In a good market you think everything will be the upside case, but we’re just not back to a place where people will assume anything.”

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