More market details to come, but first, the race to dominate artificial intelligence is now a sprint to tap Wall Street. OpenAI, the maker of ChatGPT, has confidentially filed paperwork for an initial public offering. That comes just one week after its chief rival Anthropic, the company behind Claude, submitted its own confidential IPO paperwork to the SEC. A confidential filing allows companies to begin the SEC review process in private before publicly releasing detailed financial information. But in a cheeky post on its website, OpenAI said, quote, 'We recently submitted a confidential S1, that's the SEC filing. We expect it to leak, so we're just announcing it. We have not decided on timing yet. It may be a while because there are things we want to do that are likely easier as a private company, but it's a complicated set of trade-offs and this gives us the option to go public sooner if that ends up being best.' Well, as one of the most watched companies in the world right now, the assumption that details of OpenAI's filing would leak is probably a fair one because this is a major move for a company that we may remember was founded as a nonprofit research lab in 2015 and now, in a somewhat controversial mission switch, serves hundreds of millions of users worldwide in a decidedly for-profit fashion. Well, investors, as we know, have poured enormous sums into OpenAI with recent funding rounds valuing the company at more than $850 billion, with some analysts speculating that an IPO could hit the trillion valuation mark. Not far off expectations for Anthropic, by the way, whose most recent funding round valued that company at roughly $965 billion. Well, a race to IPO looks like it's unfolding as pure-play AI companies, there are others waiting in the wings, rush to tap liquidity before SpaceX and a flood of massive tech offerings force investors to make difficult choices around which stocks to back. And then of course, another consideration is the war for talent with employees at the AI juggernauts eager to know when they will be able to cash out at least part of their equity awards. Well, whether for them or for the venture capitalists who've invested in OpenAI, Anthropic, and SpaceX over the years, the shift to life as a public company will be a huge adjustment when it comes to tracking the value of their stakes in real time. The market narrative is wildly split on whether these IPOs are likely to sustain price growth with those who are more cautious pointing to historical data that shows tech listings often experience a massive pop on day one. But when you take a look at the data, over 70% of tech companies underperform the broader market in their first 12 to 36 months of public life. Enthusiasts of course saying this is a new industrial revolution and that it's different this time. We're going to keep on watching. Coming up in a moment, a spin through the headlines that are moving the markets today, including a $10 billion drug company acquisition that has quote multi-blocker potential. But first, this episode is brought to you by Public. John, how do you make sure you're up to date on market activity?
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Paid for by Public Investing. Full disclosure in podcast description. Well, in a moment, a deeper look at the potential impact from the pipeline of blockbuster tech IPOs with today's money mover. But before we get there, a few headlines from today's trading session. Starting with earnings results from JM Smucker, ticker SJM, because with a name like Smuckers, it's got to be good. Shares in the food and beverage company home to Jif, Hostess, and Meow Mix, are up nearly 10% after the company beat earnings and revenue expectations.
Coffee, which includes the Folgers brand, was a standout performer with sales up 12% year-over-year, aided by higher prices. And then there's Uncrustables, which we've discussed in surprising depth on this show, still having a remarkable run, sending the company's away-from-home segment up 12%. Also, yes, apparently kids and athletes love that product. Looking ahead, the company anticipates sales to decline nearly 4% this year as Smucker's expects to lower coffee prices as its own input costs come down. And as a programming note, this Friday on the show I'll be joined by Todd Kaplan, chief marketing officer of Kraft Heinz to talk about that giant food company's brands that includes Oscar Mayer and Jell-O. And we're going to talk about how Todd markets a massive food conglomerate and what the 150-year-old company is planning for America's 250th birthday. So that's coming up this Friday.
Now to other market headlines. This from the world of mergers and acquisitions. Shares in US-based drug maker Nuvalent, ticker NUVL, are up nearly 40% today.
That's after GSK, Britain's second largest drug maker, announced plans to acquire the company in a $10.6 billion deal. The agreement values Nuvalent at about 124 bucks a share. That's a 40% premium to its last closing price. For GSK, the deal would mark its largest acquisition in around a decade and could bolster its oncology pipeline through Nuvalent's portfolio, which includes two late-stage lung cancer treatments that GSK says have quote multi-blockbuster potential. GSK shares are trading up over about 1% today.
And finally, as I explored at the top of the show, OpenAI and Anthropic have both made headlines for their recent IPO filings and are racing to tap into Wall Street funds and retail investors, too, by the way. But in the meantime, Anthropic just finalized one of the largest private credit deals in history.
The $35 billion deal led by Apollo and Blackstone will help fuel Anthropic's growth plans, specifically through funding the purchase of Alphabet-developed chips. Those are Google. Of course, there has been concern lately that the AI boom has overextended, played out in last week's semiconductor sell-off led by Broadcom. Shares in Broadcom still down 20% in the last week. But deals like this one with Anthropic suggests some of the largest private credit investors are still betting on big tech buildouts.
Well, in a moment, my conversation with Erik Hirsch, co-CEO of Hamilton Lane. And this could not be more timely when you consider that blockbuster deal just announced again. That's Apollo and Blackstone looking to fund some of Anthropic's activity. Well, Erik expresses his concern that the public markets have gotten fad-oriented on a handful of big tech plays and discusses what the repercussions there are for the private markets. So, we discuss private credit and where capital is flowing to in alternatives. Next, credibly topical money mover conversation coming up right after this.
The SpaceX IPO, potentially the largest public offering in history, it's meant to be happening this Friday. To some, it's a welcome sign that the IPO remains wide open, and to others, it's just another giant deal pulling capital into directions that are somewhat up for debate. Well, to break it down for today's Money Movers conversation, I invited Erik Hirsch onto the show. He's the co-chief executive officer of Hamilton Lane itself a publicly traded company but it's a private markets investment firm with over a trillion dollars a trillion in assets under management and supervision. Well, Erik has years of experience inside private funds, the deals and the data also that are driving moments like this. And during our conversation, he pushes back on the recent beating that private credit has been taking in the press. He comments on the possibility of private assets being introduced to Americans' 401ks as well as their self-directed retirement funds. And he discusses the growing divide between software investors and portfolio companies that are adapting to an AI world. While there are others who are might be out there quote just standing in the street waiting for the bus to hit them. It's a very topical conversation about all things at the intersection of private and public markets with a sprinkling of technology thrown in. So, it's about where capital is likely to be moving next. So Erik, given your unbelievable vantage point, could you comment on the big IPO that we're expecting this week, which is SpaceX, and when I talk to folks in the industry I grew up in, which is private equity, there's sort of two sentiments out there, and people are pretty binary about it. Either they say, 'This is great. The IPO markets are open, right? It's a sign that exits are finally going to come for private equity firms that have been waiting, waiting, waiting to sell their businesses.' And you've got others saying, 'So head in hands, this is going to drain liquidity out of the public markets. And in fact, this is like the opposite of a good time to try and IPO and exit.' Where do you land on that spectrum of perspectives?
I'm not sure I'm at either extreme because I think there's some truth to both. But if you put me in one camp versus the other, I'm more in the latter. I think this is taking so much capital, so much time and attention and so much headspace for retail investors that I think net-net I don't think that's an enormous positive for the private markets.
So what does this say to you about the thesis and the narrative that's been going around for a while that it is now so attractive to stay private for so long for many exciting companies? Is this a moment where the IPO is back? Does this say that this is a proof that once you hit a certain size, a certain valuation, you have no choice but you have to go public?
I'm not sure it says that. Although at these size levels, the amount of capital opportunities that are going to exist are going to be few and far between. I think the question that I'm much more interested in right now is I suspect this IPO will price well. Talk to me in a year from now as to where the stock is trading because if you look at some of these businesses, it's very clear that we're willing to ignore fundamentals. This is a non-cash flow positive business and this is all about what people believe is going to happen in the future and that might be great and all those things may happen but generally the public market can get very fad-oriented and right now I think we're very fad-oriented on a handful of big tech plays that everyone is enamored with today and I want to know whether they're going to stay enamored a year from now. Because if they're not, then what's really happened is the private investors are the one that will have made all the money on these companies and they will have sold out to the public investors who will have done very poorly. And I think that dynamic of can both do well and for both to do well this stock needs to trade well for years to come and therefore the privates have done really well, the publics can do well. We've seen plenty of examples where that's happened. And so that's a healthy outcome. If what we instead see here is public investors end up getting crushed because this comes out at way too high of a price and then normalizes, then it's going to be privates did great and publics did poorly.
Well, let's talk about the prospect of privates doing great because that has not been the headline catching people's attention frankly over the last year and specifically private credit has taken a real beating reputationally. I don't think all of it's been fair. But talk to us about what investors are saying to you, Erik, about private credit at this moment in time.
I think people are swept up in what has been just an avalanche of headlines, but very little data. And so, we're seeing lots of doom and gloom reports, gates going up, redemptions rising on these private credit evergreen funds, a lot of pain in BDC world. But here's what we're not seeing. We're not seeing rising default rates. We're not seeing loads of bankruptcies. We're not seeing loads of companies that are switching from cash pay to PIK. Those are fundamental credit problems and we're not seeing those. And if you look at even the funds that have been hit hard with gates and BDCs under pressure, if you look at the underlying performance of their assets, it's been good. So, I've never seen such a wild disconnect between kind of panic headline, but devoid of hardcore data. We've seen a handful of very public private credit issues. Ironically, most of them were underwritten by big banks, not by actual private credit firms, but beyond that, and we've heard people tell us that there might be more cockroaches other places, but we're not seeing it in the data.
Let's talk about those people because you've just sort of paraphrased Jamie Dimon, of course, the CEO of JP Morgan. So, the voices that are coming out and saying there is something to worry about when it comes to private credit are extremely influential and they do have access to a lot of data, Erik. So, when you say we're not seeing in the actual information sets the things that would typically worry those of us who are invested in private credit, where's Jamie Dimon's perspective coming from, do you think?
So, I don't know. I don't know where it's coming from, but I think what's been missing is you've had a lot of very high-profile CEOs or asset management heads who are talking about this, but I'm not seeing them providing data. I'm not seeing them point... I'm hearing them talk about problems. I'm hearing them talk about potential issues, but I'm not seeing them sort of backing that up with the data point or the chart that says, and here's specifically what I'm worried about. Having companies that are swept up in fraud problems, that's not great, but that happens. That's unfortunately the reality of business. But a few of those episodic issues to me does not translate into something that is thematically problematic. I want to see data if we're going to talk about thematics.
So if we haven't seen the data that shows stress in the private credit space, what kind of data have you seen, Erik, when it comes to the ability of firms to raise new private credit funds? How's the fundraising cycle going for that particular asset class at the moment?
So I think you got to think about that asset class into two pieces as it relates to fundraising. There is the traditional institutionally-oriented closed-end traditional funds that we would think of as being kind of the private markets. So that's a four or five year investment period, 12-year fund life, all institutionally backed. And then over here we have capital that's getting raised in more of these evergreen formats that is a mix of institutional capital and individual capital. Where we've seen most of the pain and fundraising challenges is on the latter, not the former. Institutional investors continue to put meaningful capital into the space. So, they're not running away from private credit where we've seen the big withdrawals and some of the fundraising challenges has really been dominated by the individual investor. And I think unfortunately that investor is just much more susceptible to headlines whereas the institutional investor is really diving into the fundamentals and they're saying we continue to like what we see. We continue to like exposure to this asset class and we're continuing to invest.
