U.S. ECM Recap

January 4, 2024

2023 Recap and a Look Ahead: Optimism Prevails for U.S. ECM

Despite a challenging backdrop riddled with lingering inflation concerns, the S&P 500 returned over 24% and the NASDAQ closed up 43%. U.S. ECM proceeds also increased 38.9% over prior year, but continue to lag normalized levels of activity. Interestingly, Q4 issuance trends did not follow the broader market rebound with a decrease from the prior two quarters representing a “wait and see attitude.” Seven IPOs raised $500M or more in proceeds (vs. just four in 2022) and were by and large warmly received, with a dollar-weighted one-day average return of 19.0%.

A tone of optimism for 2024 continues to percolate with inflation at the slowest pace in two years and the Fed signaling rate cuts. We last witnessed rate reductions in 2019 and 2020, which coincided with a period of strong ECM activity. Following two consecutive years of historically slow issuance, coupled with increased costs of private funding, the IPO pipeline is continuing to fill. Notable IPOs on file include: UL Solutions, Aspen Insurance Holdings, BrightSpring Health Services, Waystar and Hornbeck Offshore. Possible 2024 IPOs yet to file include: Stripe, Panera, Reddit, Skims, Discord, Chime, Fanatics, Klarna and Shein.

2023 U.S. Trends and Highlights

• Including Unregistered Block activity tracked by CMG, total capital raised exceeded $150.4B via 748 offerings (excluding SPACs)

• Convertible issuance accounted for $52.5B via 81 offerings representing a 74% increase over the prior year

• IPOs raised $21.4B via 125 offerings representing an 142.5% increase in capital raised vs 2022, while follow-on issuance raised $129.3B via 623 offerings representing a 29.7% increase over the prior year

• 31 SPACs priced raising $3.8B representing a 71.4% decrease over the prior year when 86 offerings accounted for $13.4B in proceeds

• Healthcare remained the most active sector in 2023 raising $34.9B in proceeds, accounting for 23.2% of total capital raised via 230 offerings, followed by Technology $25.4B (16.9% of total capital) and Industrials $19.0B (12.6% of total capital)

• On a dollar-weighted basis, IPOs returned 18.0% from offer to first day close (vs. a mean of 14.1%) and returned 21.4% from offer to year end (vs. a mean of (4.6%))

• On a dollar-weighted basis, registered follow-ons returned 2.3% from offer to first day close (vs. a mean of 1.9%) and returned 9.1% from offer to year end (vs. a mean of 1.1%)

• Technology provided the strongest dollar-weighted offer to year-end return across all offering types with gains of 22.5%

• Total fees paid to the street increased 35.6% from the prior year to $4.1B (excluding SPACs)

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2022 vs. 2023 Dollar-weighted One-day Return

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Largest Dollar-weighted Alpha Contributors of 2023 (1-Day)

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Largest Dollar-weighted Alpha Contributors of 2023 (To Current (as of year-end))

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Discount Trends (Median File to Offer): 2022 vs. 2023

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IPO vs. Follow-On Composition as a % of Proceeds Raised: 2022 vs. 2023

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Follow-On Composition as a % of Proceeds Raised: 2022 vs. 2023

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