The S&P 500 was up a healthy 6.2% in January of this year. Unfortunately, a strong stock market did not translate to high US ECM volume. According to CMG data, January produced 50 offerings that raised just $7.2B in capital. Furthermore, the IPO market was particularly lackluster. There were seven IPOs that raised only $347M in capital (ex SPACs).
The last time the dichotomy between US stock market performance and ECM volume was this drastic was in 2019. In January of that year the S&P 500 was up 7.9% while US ECM volume came in at 42 offerings raising $6.7B in capital. IPO volume was also strikingly similar with two offerings raising $300M in capital.
Given the similarities, let’s look at what happened next in 2019. From February 1 to December 31, 2019, there were 854 offerings that raised $225.2B in capital. IPOs picked up in March, and the year ended with 164 IPOs raising $50.6B in capital (ex SPACs). During that time, on average, IPOs opened up 14.5%.
After a very sluggish start, 2019 turned out to be a marquee year for large IPOs including: Lyft, Tradeweb, Pinterest, Uber, Avantor, Chewy, SmileDirectClub, Peloton, and XP Inc. Those IPOs on average opened up 15.5% and are, on average, up 10.4% as of February 1, 2023. Will ECM continue to gain momentum into year-end, like we saw in 2019?
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