Fintech Clear Street slashes US IPO size by 65% as caution grips investors

By Arasu Kannagi Basil and Prakhar Srivastava

Feb 12 (Reuters) - Wall Street broker Clear Street on Thursday slashed the fundraising target of its U.S. IPO by a whopping 65%, resulting in a big haircut to its initial valuation projection, underscoring the cautious approach of investors to new listings.

The New York-based company is now aiming to raise up to $364 million by selling 13 million shares at $26 to $28 apiece, down from its plan to raise as much as $1.05 billion by offering 23.8 million shares at $40 to $44.

At the top of the new range, Clear Street would be valued at about $7.2 billion compared with the previous aim of $11.8 billion.

The revision comes even as IPO activity in the U.S. has shown signs of revival this year, with investors keeping a close eye on valuations and pushing for more realistic pricing, particularly for deals that initially come to market with richer expectations.

Recent market volatility has also pressured would-be issuers to adopt more conservative terms as they prepare to tap public markets, contributing to last-minute recalibrations of both deal size and price.

Clear Street's revision follows similar moves elsewhere, with Brazilian fintech Agibank AGBK.N slashing its offering just a day before its debut, following weak trading by rival PicPay PICS.O. Separately, Liftoff Mobile postponed its planned U.S. listing amid a software sector selloff earlier this month.

"The recent AI-driven selloff in financial stocks likely dampened investor sentiment, but the sharp decline in crypto markets also had an impact as Clear Street has served as underwriter for multiple crypto treasury capital raises, particularly Strategy's latest offerings," said IPOX Research Associate Lukas Muehlbauer.

He added that the firm's crypto-related exposure may have made investors less willing to pay the original valuation without clearer proof growth could hold up if issuance activity slows.

Founded in 2018, Clear Street started as a prime brokerage platform and has since expanded into other businesses, including investment banking.

Cornerstone investor BlackRock BLK.N has indicated interest in buying up to $200 million of shares, according to the prospectus.

The offering is expected to price later on Thursday.