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The year's large IPOs are trading well, so where is the spring pickup?

May 14, 2024

So far this year, 27 IPOs have raised $100 million or more, outpacing this point in the prior two years. While 2024's larger IPOs have traded very well overall, activity has started to stall in May. Nevertheless, we still anticipate a pickup in deals in the seasonally-active months of June and July.

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The year's $100+ million IPOs average a solid 14% return from offer, driven by strong first days (+17%) but partially offset by weaker trading in the aftermarket (-3%). The broader group is weighed down by biotechs, which have mostly struggled. Excluding those deals, the remaining 20 IPOs' average return from offer jumps to 24%, with gains both on the first day (+16%) and in the aftermarket (+7%). 85% of the ex-biotech group trades above issue.

The Year's Sizable IPOs Have Delivered Strong Trading
Despite positive returns from the recent crop of IPOs, new issuance has wavered. In April, broader markets stumbled amid dampened rate cut expectations, the IPO Index shed 10%, and in the weeks that followed, both launches and new filings from notable names cooled. On Monday, online casino game developer Games Global (GGL) withdrew its $254 million IPO just hours ahead of pricing, citing market conditions.

Even with these obstacles, there are still reasons to be optimistic about activity through the rest of the 2Q. The Renaissance IPO Index has seesawed but started to recover in May, gaining 3% since the start of the month, and 6% from the April low. In the past decade, the average number of sizable IPOs was slightly lower in May (8) compared to April (9), before accelerating in June (15) and July (12). There are also several viable IPO candidates in the public pipeline, though we need to see more additions in the next few weeks to sustain a pickup through the summer.

This week has brought some encouraging signs. Two issuers launched on Monday. Hotpot chain Super Hi International (HDL) is on tap to raise $57 million later this week, and specialty insurer Bowhead Specialty (BOW) is scheduled to raise $100 million next week. In addition, two notable names joined the pipeline, aluminum company Novelis (NVL) and Mexican airline Grupo Aeromexico (AERO). Novelis is on file for an estimated $1.3 billion deal, making it the largest IPO currently in the pipeline, while Aeromexico filed to raise $300 million.