US IPO activity remained weak in the first half of 2022 as only 39 deals were priced during the six month period, marking the weakest first half IPO total since 2009. In addition, a paltry $4.1 bln in new cash was raised during the first six months of 2022 – 95% lower than the amount raised during the same period of last year.
1st Half 2022 US IPO Activity
According to Renaissance Capital, 39 new deals were priced in first half of 2022 representing an 82.3% drop from the number of deals priced during the same period of last year. The number of IPOs priced during the first half of 2022 was also 78.1% below the 178 new deals that were priced during the second half of 2021, and marks the lowest number of IPOs priced during the first half of a year since 2009 when a mere 14 deals were priced.
The volume of new capital raised during the first half of 2022 totaled $4.1 bln, 94.8% lower than the $79.9 bln raised during the same period last year. Over the first six months of 2022 the amount of new capital raised in the IPO market was 92.2% lower than the $52.5 bln that was raised during the second half of 2021.
Seventy-nine (79) new IPOs were filed during the first half of 2022, a 70.3% drop from the 266 deals filed during the same period last year. The number of new deals filed over the first six months of 2022 was 64.7% below the number of new deals filed during the second half of 2021.
The US IPO market was significantly weaker than the overall equity market during the first half of 2022 as the Renaissance IPO Index fell 47.8% during the six-month period compared to a 20.6% drop for the S&P 500 Index during the same period.
Our Take
Overall, US IPO activity in the first half of 2022 was extremely weak as all IPO metrics dropped sharply from the same period last year. The weakness seen in US IPO activity over the past seven months is a sharp departure from the robust activity seen for the bulk of 2021. This trend, on top of the growing likelihood of a recession in 2022, suggests that IPO activity will remain depressed throughout most of the remainder of the year. We suspect this weakness will depress earnings at investment banks for the coming few quarters.
Consistent with these trends, we expect that most investment banks and independent research firms will limit their hiring of equity research analysts and salespeople over the near-term. This is due to the weakness in the US IPO market and the reticence of most asset managers to boost their research payments to their sell-side and independent research counterparties.