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Investors no longer fall for themselves to invest money in initial U.S. public offerings, reducing the chances that a company may trade its shares above expectations or enjoy a “big” share price on the first day. of negotiation.
The new figures show that the IPO market has cooled substantially since the first quarter, as shares of newly floated companies have fallen and some high-profile debuts have failed.
In January and February, the shares of companies joining the New York Stock Exchange or the Nasdaq rose on average by more than 40% from their IPO on the first day of trading, according to data from Dealogic.
In March and April, average octopus had shrunk to about 20%, and in May it dropped to an average of 18% by mid-last week. The data excludes the IPOs of special purpose acquisition companies (Spacs), which have been on the verge of drying up after regulators launched this market.
Most companies continue to rise in their market debut, but in recent weeks a number of entrants to the public market have fallen on their first day of trading. Chinese insurance technology group Waterdrop fell 19% in its debut, while Vaccitech, the company that owns the technology behind the Oxford / AstraZeneca coronavirus vaccine, lost 17%. Biotech company Talaris Therapeutics fell 4.4% when it debuted in early May.
“It wasn’t the market” that everyone has won “in the first quarter,” said Rachel Phillips, a partner at law firm Ropes & Gray, which practices capital markets.
Prices on the same IPO have also been adjusted.
In the first quarter, one in four U.S. listed companies traded OP shares above their expected limit, according to Refinitiv data. The fourth quarter of last year was even hotter, when about 40% managed to surpass their ranks.
Since the beginning of the second quarter, the share of companies that exceed their price expectations has fallen to 11%, according to Refinitiv. Thirteen percent has lower-than-expected prices, the highest share since the pandemic began.
“There was an incredibly upbeat market environment” earlier this year, said Jeff Bunzel, head of capital markets at Deutsche Bank. In January, all U.S. technology stock market tickets were priced above their range, he said. Now, “there is a lot of room for the market to take a step back[but]. . . it is not that the IPO market is broken or in poor condition ”.
With one month left in the second quarter, 54 companies have so far raised $ 18 billion. In the first quarter, 101 companies, excluding Spacs, raised $ 42 billion, the highest level of quarterly IPO during the pandemic, according to Refinitiv data.
Investors have still claimed some OPCs.
The Figs brand, which joined the New York Stock Exchange on Thursday, cost its IPO at $ 22 ($ 3 above the high point of its range) and added 36% on its first day of trading. negotiation. Shares of the company rose another 14% on Friday.
“Regardless of where the market is, it was our time,” said Heather Hasson, co-founder of the company.
Others have been more susceptible to market conditions, with at least three companies citing equity market trading in May as the reason they chose to delay their IPOs.
“That’s the problem, when you go public, you’re subject to the vagaries of the market,” said Tom McInerney, chief executive of Genworth Financial, which planned to separate its mortgage insurance business. mid-May. When concerns about price competition and inflation caused stocks in the sector to fall by more than 10%, the company decided to delay its IPO at the last minute.
“It simply came to our notice then. . . bad luck, ”McInerney said.
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