Is the IPO Recession Finally Easing?
A year after Russia’s invasion of Ukraine and a spike in inflation fueled sharp market volatility that stymied most initial public offerings in 2022, last week saw a flood of listings.
It had not been a busier week for 15 months, according to data from Dealogic.
Five IPOs, including the $638 million offering of solar technology company Nextracker and the $190 million offering of Chinese sensor maker Hesai, were completed last week.
In total, the IPOs raised about $1.17 billion in cash, six times more than the previous week, when stock market debuts brought in about $193 million, according to Dealogic.
Investment bank executives and IPO lawyers said that if the move continues, bolstered by a decline in volatility and a rise in corporate valuations, they expect several large companies that are waiting to act, including social media firm Reddit and SoftBank-owned chipmaker Arm could launch IPOs in the second half of 2023.
IPOs, excluding those of SPAC companies, raised the lowest amount of funds in more than two decades in 2022, reaching $8.7 billion, compared with $154.1 billion in 2021, according to Dealogic.
Wall Street’s fear gauge, the Cboe volatility index, has dropped nearly 12% since the start of the year, signaling reduced investor anxiety and making it easier to launch IPOs.
Some companies are waiting for a sustained recovery from IPOs before deciding to trigger their debut, some of the executives said. The move is likely to take at least until the summer (in the northern hemisphere) if the market recovery continues, they add.
Source: CNN Brasil
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