In February, eight IPOs raised $271 million, a 76% y/y decline in IPO count and a 97% drop in proceeds. February IPOs raised fewer proceeds than any month since November 2018. The month’s issuers were primarily micro-caps, as the average deal size shrank to a mere $34 million; just one deal raised more than $100 million. Issuance was slow as companies finished preparing 4Q21 financials, but recent poor performance and rising volatility halted the normal wave of launches after Presidents’ Day. On the bright side, the IPO market showed signs of finding a bottom, with the IPO Index down just 1%, outperforming the S&P 500. Half of the month’s IPOs came from the healthcare sector, with the remainder in industrials, communications, and technology. Blank check activity declined to 20 SPACs raising $2.8 billion, and withdrawals continued to roll in. The wave of volatile small issuers led to mixed returns: Just three of the month’s eight deals finished above offer (38%), though February IPOs averaged a 46% return thanks to one high-flying micro-cap, and averaged -12% without it. Pipeline activity slowed considerably, with just seven new IPO filings in February, likely signaling a slow March.
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