US IPO activity remained mixed in November 2019 as a mere 13 deals were priced during the month, lower than the number of new deals priced in October, but higher than the number of deals priced in November of last year. Only $0.7 bln in new cash was raised in November – lower than the amount raised during the prior month but higher than the new cash raised at the same time last year.
Mixed November US IPO Activity
According to Renaissance Capital, 13 new deals were priced in November representing a 117% rise from the 6 deals priced during the same month last year, and a 35% drop from the 20 deals that were priced in October. Over the first eleven months of this year 152 deals have been priced, 17.4% below the total seen during the same period of last year.
The volume of new capital raised in November 2019 totaled a paltry $0.7 bln, 250% above the $0.2 bln raised during the same month last year, and 69.6% below the $2.3 bln raised in October. Over the first eleven months of this year, $43.6 bln in new capital has been raised, a drop of 2.9% over the new capital raised during the same period in 2018.
Of the 13 deals priced in November, 38% were from the healthcare sector totaling $262 mln in new capital raised, 38% of the deals were in technology where $221 mln was raised, and 15% of the deals were in real estate where $189 mln was raised. The remaining 8% of the deals priced in November were in the financial sector where $40 mln was raised.
Twelve (12) new IPOs were filed during November, a 20% rise over the 10 deals filed during the same month last year, and a 36.8% decline from the 19 deals filed during October. During the first eleven months of this year 198 new deals were filed, 6.6% lower than the 212 new deals filed during the same period last year.
IPO performance posted stronger returns than the overall market during November. The Renaissance IPO Index rose 5.7% during the month compared to a 3.4% rise in the S&P 500 Index during the same period. Over the first eleven months of the year, IPOs rose 34.92%, outpacing the overall stock market as measured by the S&P 500, which rose 25.3% during the same period.
Our Take
Despite the mixed performance in US IPO activity during November, the weakness evident in the IPO market through most of the year continues. The main area of good news we saw in the November IPO data was the fact that US IPO performance continued to outpace a robust overall equity market.
We believe that the weak performance seen in the US IPO market so far this year, combined with weakness in trading commissions, and the drop in sell-side research revenue prompted by MiFID II, will act as a drag on earnings at most investment banks over the next few quarters. Consequently, we doubt many investment banks will be increasing their investment in their US research businesses any time soon – a factor that should keep a lid on research department hiring over the near term.