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Peloton Interviews Banks for IPO

Peloton Interactive Inc. is interviewing banks this week for roles on an initial public offering, taking a critical step toward an IPO this year, according to people familiar with the matter.

The maker of video-streaming stationary exercise bikes is expected to select its slate of underwriters in the coming weeks and will likely seek to debut in the second half of 2019, some of the people said.

Peloton’s co-founder and Chief Executive John Foley said in an interview with The Wall Street Journal last year that 2019 “makes a lot of sense” for the company’s IPO timing.

Peloton is expected to seek a valuation in excess of the roughly $4 billion estimate last year after a fund-raising round led by venture-capital firm TCV, some of the people said. That valuation was a sharp jump from the $1.25 billion level at which the company raised capital in 2017.

Peloton is part of a wave of companies that have raised vast amounts of cash in the private markets and are now seeking to go public in 2019, a potentially record year for IPOs, even though the year began with the Securities and Exchange Commission unable to greenlight traditional IPOs for a month because of the partial government shutdown.

Ride-hailing firms Uber Technologies Inc. and Lyft Inc. and workplace-messaging company Slack Technologies Inc. recently filed confidential paperwork for offerings with the SEC. All three are expected to debut in the next two quarters, people familiar with the companies’ plans say.

Should those three companies and others like Peloton debut this year, it could be a record-breaking year for IPOs in terms of dollars raised, topping the year 2000, the high-water mark when tech companies raced to cash in on lofty valuations at the height of the dot-com boom. The companies looking to debut this year are significantly larger and more mature than tech companies that went public around the turn of the century.

So far this year, just 10 companies have gone public on U.S. exchanges, raising $2 billion, largely reflecting the shutdown. That is a drop of more than 80% in dollars raised from this time last year, when 30 companies had raised $11.5 billion.

Still, several bankers say the pipeline for IPOs is as busy as any they can recall. Private companies, particularly those in the technology sector or with a tech angle, have been ramping up IPO timing as they look to tap a stock market that has been largely hospitable to fast-growing companies. Bankers say they have been busy in the early weeks of 2019 meeting with companies seeking to fill underwriting roles.

Peloton, founded in 2012, makes stationary bicycles that the company sells for prices ranging from $2,245 to nearly $2,700 when packaged with various accessories. Many of Peloton’s customers use the bikes at home, paying about $39 a month to stream live classes that the company produces using its own instructors.

Should it move forward with an IPO this year, Peloton would be one of the first companies to test public-market investors’ appetites for the burgeoning high-end fitness category. The spinning-class giant SoulCycle Inc., which operates exercise studios, filed for an IPO in 2015 but eventually shelved those plans.

The New York-based Peloton, which has showrooms around the U.S., also recently launched a treadmill and has a digital membership that offers live and prerecorded studio classes that include yoga and boot camp.

Peloton is expected to generate more than $700 million in revenue in the fiscal year ending February, according to a person familiar with the matter. That was a target that Peloton’s CEO outlined last summer in the WSJ interview.

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