US IPO Activity Remains Robust in May

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US IPO activity surged in May, 2021 as 25 deals were priced during the month, 317% higher than the number of deals priced during the same month of last year.  During May $5.8 bln in new cash was raised – 263% higher than the $1.6 bln raised during the same month of 2020.

May 2021 US IPO Activity

According to Renaissance Capital, 25 new deals were priced in May 2021 representing a 317% jump from the 6 deals priced during the same month last year, and a 21.9% drop from the 32 deals that were priced in April.  During the first five months of 2021, 158 IPOs have been priced – 351% higher than the number of deals priced during the comparable period of last year.    

The volume of new capital raised in May 2021 totaled $5.8 bln, 263% above the $1.6 bln raised during the same month last year, but 48.7% lower than the $11.3 bln raised in April.  So far in 2021, total IPO proceeds raised total $56.2 bln – 539% higher than what was raised over the first five months of last year. 

Eight of the twenty-five deals priced during May (32%) came from the Technology sector where  $1.7 bln was raised; seven of the new deals priced during the month (28%) were from the Healthcare sector where $1.0 bln was raised; three deals (12%) was from the Consumer Discretionary sector where $94 mln was raised; three deals (12%) was from the Industrials sector which raised $394 mln; two deals (8%) was from the Consumer Staples sector which raised $1.8 bln; and two deals (8%) came from the Financials sector which raised $465 mln.

Forty-four (44) new IPOs were filed during May, a 144% surge over the 6 deals filed during the same month last year, but a 4.3% drop from the 46 deals filed during April.  Over the first five months of 2021, 212 new IPOs were filed – 266% higher than the number of new IPOs filed during the same period in 2020.

IPO performance posted slightly weaker returns than the overall market during May, 2021.  The Renaissance IPO Index dipped 1.3% during the month compared to a 0.5% rise in the S&P 500 Index during the same period.

Our Take

US IPO activity remained robust in May, capping off a strong period for IPOs over the past seven months – a trend we suspect will lead to higher earnings at many investment banks during the first half of 2021. 

Despite the continued strength in US IPO activity, the healthy growth in equity commission revenue, and the rebound in overall economic activity in recent months, we doubt that many investment banks will add equity research analysts or salespeople during the coming months.  This cautiousness is due to the fact that over the past twelve months many asset managers have chosen to restrict their payments to the sell-side and independent research providers that serviced them during the COVID-19 pandemic.

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About Author

Mike Mayhew is one of the leading experts on the investment research industry. In addition to founding Integrity Research, Mike is on the board of directors of Investorside Research Association, the non-profit trade association for the independent research industry, and a frequent speaker on research industry trends and developments. Mike has over thirty years of research industry experience. Email: Michael.Mayhew@integrity-research.com

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