US IPO activity rebounded in September 2023 as thirteen new deals were priced during the month, 117% higher than the level of deals priced during the same month of last year. In addition, $6.8 bln in new cash was raised in September – 258% above the amount of new capital that was raised in September of 2022.
September 2023 US IPO Activity
According to Renaissance Capital, 13 new deals were priced in September 2023, representing a 117% surge from the 6 deals priced during the same month last year, as well as a 160% increase from the number of deals priced in August 2023. The number of new deals priced during the first nine months of this year (81 new deals) was 26.6% higher than the number of new deals priced during the same period in 2022.
The volume of new capital raised in September 2023 totaled a robust $6.8 bln, 258% above the $1.9 bln raised during the same month last year, and well above the $41.7 mln in new capital raised in Augsut 2023. In fact, the amount of new capital raised in September was the highest monthly total on record seen since November 2021 when $17.6 bln was raised. Over the first nine months of 2023, the total amount of new capital raised totaled $16.7 bln – 156.9% above the amount raised during the same period of last year.
Five of the thirteen deals priced during September (38.5%) came from the Technology sector where $6.12 bln was raised; three deals (23%) came from the Healthcare sector where $619 mln was raised; one deal (7.7%) came from the Communication Services sector where $10 mln was raised; one deal (7.7%) came from the Financials sector where $8 mln was raised; one deal (7.7%) came from the Real Estate sector where $8 mln was raised; one deal (7.7%) came from the Materials sector where $7 mln was raised; and, one deal (7.7%) came from the Industrials sector where $5 mln was raised.
Sixteen (16) new IPOs were filed during September, a 15.8% drop from the 19 deals filed during the same month last year, and no change from the 16 deals filed during August. One hundred thirty three (133) new IPOs were filed during the first nine months of 2023, 17.7% higher than the number of new IPOs filed during the same period in 2022.
The US IPO market posted a less weak performance than the overall equity market during September 2023 as the Renaissance IPO Index fell -2.75% during the month compared to the -4.87% drop seen in the S&P 500 Index during the same period.
Our Take
US IPO activity rebounded in September 2023 from the levels seen last year at this time. Consistent with this performance, IPO activity over the past 12 months has been slightly stronger than the extremely weak activity seen during the prior 12 months. Despite this improvement, market nervousness over continued Federal Reserve tightening and the possibility of a recession in 2024, is likely to dampen U.S. IPO activity throughout the remainder of this year. We suspect this weakness is likely to keep a lid on earnings at most investment banks over the next 6 to 12 months.
Consistent with these trends, most investment banks are likely to limit their hiring of equity research analysts and salespeople for remainder of 2023. This is due to the weakness in the economy, and the limit on buy-side spending on sell-side and independent research. In fact, we suspect that the SEC’s decision to allow the SIFMA “no action” letter on hard dollar payments to US brokers to lapse, will cap buy-side payments to investment banks for their research in the latter half of this year until the EU can establish a workaround for European asset managers.