Energy companies raise money through IPOs at fastest pace this century

Energy companies are selling shares to the public at the fastest pace in more than two decades. Firms have raised money this year through initial public offerings quicker than at any point this century, according to market data.

The rush comes as investors hunt for stocks that can benefit from the boom in artificial intelligence. Data centers that power AI systems need huge amounts of electricity, and that has pushed up demand for power generation, transmission and related services.

Several energy firms have filed to go public or completed deals in recent months. The listings include companies involved in natural gas, renewables, nuclear and grid infrastructure. Bankers say the pipeline of new deals remains strong heading into the final months of 2024.

"The AI theme has really caught fire with investors," one investment banker told reporters this week. "They are looking for any pure-play way to get exposure to the power buildout that is coming."

The surge marks a sharp turnaround from the slow IPO market of the past two years. Higher interest rates had cooled deal activity across sectors. Now falling rates and the clear link between AI growth and power needs have opened the floodgates for energy companies.

Shares of existing power and utility stocks have also jumped this year. Some have gained more than 30 percent as analysts raised forecasts for electricity demand. Data centers could add as much as 10 percent to U.S. power consumption by the end of the decade, according to some estimates from utilities and consultants.

Not every deal has been a blowout success. A few recent energy IPOs priced below their target ranges and saw mixed first-day trading. Still, the overall volume of capital raised has outpaced any comparable period since the early 2000s tech and energy boom.

Investment banks expect the trend to continue. Companies that own power plants, build transmission lines or supply equipment for renewable and gas projects are all considering listings. Private equity owners who bought many of these assets after the last energy downturn now see a chance to cash out at higher valuations.