By Manya Saini
April 16 (Reuters) - Aerospace and defense parts maker Arxis' shares surged nearly 36% in their Nasdaq debut on Thursday, signaling growing appetite for defense and industrial listings as geopolitical tensions escalate.
Aerospace suppliers are increasingly turning to equity markets to fund expansion and meet rising demand from commercial aviation and defense customers, with investor appetite for industrial listings holding up.
At the same time, geopolitical tensions have reshaped demand
for aerospace and defense equipment as countries ramp up military spending, prompting investors to shift toward industrial names seen as better positioned to weather the impact of these conflicts.
"The wars in the Middle East and Ukraine have created structural tailwinds for the A&D sector, with higher defense spending and improved procurement visibility," Troy Hooper, co-head of equity capital markets, Americas, at Mergermarket, told Reuters.
"At the same time, the rapid adoption of drone and autonomous technologies is transforming modern warfare and creating a new class of high-growth suppliers."
The stock opened for trading at $38 and was last up 30%.
The Bloomfield, Connecticut-based company sold 40.5 million shares in an upsized initial public offering after pricing shares at $28 apiece, raising $1.13 billion. The IPO valued Arxis at over $11 billion, based on the outstanding shares listed in its filings.
The success of the offering signals that the IPO market remains open to select sectors despite market volatility, and that companies with strong profits and institutional backing can still go public.
Arxis makes electronic and mechanical components, including seals, gaskets and metallized fabrics, for aerospace and defense, medical technology and specialized industrial markets.
Its products include connectors, cable assemblies, RF and microwave components, sensors, and precision mechanical parts such as bearings and seals.
"Arxis won't be a one-off. The A&D IPO pipeline is building. Private capital continues to flow into defense startups, increasing their likelihood to go public later," Mergermarket's Hooper said.
(Reporting by Manya Saini in Bengaluru; Editing by Shilpi Majumdar and Shailesh Kuber)
