US IPO activity continued to remain anemic in April 2022 as a paltry 8 deals were priced during the month, 75% below the number of deals priced during the same month of last year. In addition, a meager $0.7 bln in new cash was raised during the month – 94% lower than the $11.3 bln that was raised during April of 2021.
April 2022 US IPO Activity
According to Renaissance Capital, 8 new deals were priced in April 2022 representing a 75% plunge from the 32 deals priced during the same month last year, but a 300% rebound from the 2 deals priced in March 2022. Over the first four months of 2022, 26 new deals were priced, 80.5% below the 133 new deals priced during the first four months of last year. In fact, the number of new deals priced so far this year was the weakest seen in the first four months of a year since the 16 new deals priced during the first four months of 2016.
The volume of new capital raised in April 2022 totaled $0.7 bln, 93.8% lower than the $11.3 bln raised during the same month last year, but 600% above the $0.1 bln raised in March 2022. Over the first four months of 2022, the amount of new capital raised in the IPO market totaled $2.8 bln – 94.4% lower than what was raised during the same period of last year.
Three of the eight deals priced during April (37.5%) came from the Healthcare sector where $252 mln was raised; another three deals (37.5%) came from the tech sector where $74 mln was raised; one deal (12.5%) came from the energy sector where $384 mln was raised; and the remaining deal (12.5%) came from the industrials sector where a meager $15 mln was raised.
Thirteen (13) new IPOs were filed during April, a 69.8% drop from the 43 deals filed during the same month last year, and an 18.8% dip from the 16 deals filed during March. Over the first four months of 2022, 61 new deals were filed – 62.6% below the number of new deals filed during the same period in 2021.
The US IPO market was significantly weaker than the overall equity market during April 2022 as the Renaissance IPO Index plunged 21.1% during the month compared to a 10.2% drop for the S&P 500 Index during the same period.
Our Take
Overall, US IPO activity remained weak in April 2022 as most IPO metrics evidenced anemic activity during the month. The weakness seen in US IPO activity over the past five months is a sharp departure from the robust activity seen during the first half of 2021, and could indicate that IPO activity will remain sickly well into the second half of this year. We would not be surprised if this weakness doesn’t dampen earnings at investment banks for the coming few quarters.
Consistent with these trends, we suspect that most investment banks and independent research firms will limit hiring of equity research analysts or salespeople over the near-term. This is not only due to the weakness in the US IPO market, but also reflects the cautious approach taken by most asset managers as they remain reticent to hike research payments to their sell-side and independent research providers in a post MIFID II environment.