The return of large tech IPOs this week after a prolonged drought isn’t just a test of investors’ appetite for risky new offerings — it’s a key moment for Wall Street’s top advisor, Goldman Sachs.

Chip designer Arm is expected to begin trading Thursday in the year’s biggest listing. Delivery firm Instacart and marketing automation platform Klaviyo are expected to list as soon as next week.

While they each operate in vastly different parts of the tech universe, the companies have one important thing in common: Goldman is a key advisor.

The stakes are exceptionally high for all parties involved in this situation. Last year marked the slowest period for American IPOs in the past three decades, primarily due to significantly elevated interest rates, escalating geopolitical tensions, and the lingering aftermath of poorly performing 2021 listings.

The success of IPOs like Arm and others would instill much-needed confidence among CEOs who have been hesitant to take the plunge, and this increased activity could potentially rejuvenate other segments of the financial sector, such as mergers and financing.

For Goldman Sachs, in particular, these developments carry substantial significance. The firm relies more heavily on investment banking compared to its competitors, JPMorgan Chase and Morgan Stanley.

Amid the broader industry’s downturn, Goldman has experienced the most severe decline in revenue this year among the six largest U.S. banks. CEO David Solomon has had to grapple with internal dissent and departures linked to strategic missteps and his leadership style.

Mike Mayo, a banking analyst at Wells Fargo, emphasized the critical nature of this situation, stating, “This is at the very heart of what Goldman Sachs specializes in.”

Expectations are running exceptionally high, and it is likely that they will meet these expectations. However, should they fall short, it could lead to a barrage of questions and concerns far more substantial than anything witnessed thus far.

Source: CNBC.com