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Renaissance Capital's August IPO Market Update

September 1, 2023

Amid the IPO market’s annual August break, five very small issuers raised a combined $42 million, well below the typically-slow month’s 10-year average (10 IPOs, $1.9B). The lineup included four traditional IPOs, all of which finished below issue, and one direct listing, which delivered volatile trading before being halted for insufficient volume. The month’s biggest headlines came from the pipeline, with a handful of large names lining up for potential September debuts. UK-based chip designer Arm (ARM) led the charge, filing for an IPO we estimate could raise $6 billion or more. Just one blank check company went public, a slight decrease from the prior month, while new merger announcements jumped after sinking to a post-2020 low in July. Merger completions held steady, and terminations and liquidations continued to pour in. The Renaissance IPO Index tumbled -11.1% in August, compared to -1.5% for the S&P 500, amid a broader market selloff on news of inflation, China’s economy, and bank downgrades. The IPO Index is still positive for the year (+31.4%), well above the S&P 500 (+18.9%), and the year’s large issuers have delivered solid trading, with more than 80% above issue at month-end. As August comes to a close, all eyes are on the September IPO market, and anticipation is running high for the first big post-Labor Day launches. We expect to see a pickup in the coming month and a gradual rise in activity through year-end, assuming the year’s large deals continue to perform well.

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