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Renaissance Capital's January IPO Market Update

February 1, 2023

Following the challenges of the prior year, the 2023 IPO market started off strong with the Renaissance IPO Index climbing 16%, more than double the S&P 500's 6% gain. Seven IPOs raised $313 million, led by two issuers that raised $100+ million: property and casualty insurer Skyward Specialty Insurance Group (SKWD) and US oil and gas producer TXO Energy Partners LP (TXO). January deal count came in slightly below the 10-year median (11 IPOs), and lower than the prior three years. A handful of small issuers managed to slip through the IPO window, but increased scrutiny from regulators kept pop-and-drop trading at bay. January IPOs averaged a -16% return from offer, as modest first-day gains (2%) were wiped out in the aftermarket (-19%), though the two larger IPOs both finished well above issue. The pipeline saw a pickup in activity with 18 additions, including eight that submitted initial filings to raise $100 million or more, the most since last January. Just two blank checks raised $175 million and six companies listed via SPAC merger, and there were no new blank check IPO filings for the first time in six years as terminations and liquidations continued to pour in. While companies remain cautious about going public, it's a positive sign that larger deals are able to get done, and new filings and updates from sizable issuers mean a strong backlog for when market conditions improve.

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Renaissance Capital's monthly IPO market updates are normally exclusive to IPO Pro. Read on for an in-depth look at the January IPO market, and sign up for a free trial of IPO Pro for access to our comprehensive IPO calendar, alerts on new IPO content, screening capabilities, and more.

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Largest IPOs
Due to the month's limited activity, January's five largest IPOs included two micro-cap deals, and the top five offerings raised 95% of the month's proceeds. Skyward Specialty led the group with the first major IPO of 2023, followed by TXO Energy Partners, the year's first energy deal. The only other non-micro-cap was Chinese edtech QuantaSing Group.

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Best and Worst Performers
January's three largest IPOs delivered the strongest performances, led by Skyward Specialty with a 23% gain. The remainder of the month's deals finished below issue. Lionel Messi's lifestyle brand MGO Global was the bottom performer, ending with a -52% loss.

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IPO Pipeline
There were 18 additions to the IPO pipeline in January, up from December and above January's 10-year average of 16. The month's new filings featured eight that plan to raise $100+ million, led by J&J's consumer health unit Kenvue (KVUE), which we estimate could raise up to $5 billion, followed by solar tracker systems provider Nextracker (NXT). Other large filers included frac sand provider Atlas Energy Solutions (AESI), Israeli renewables company Enlight Renewable Energy (ENLT), Chinese lidar developer Hesai Group (HSAI) and Chinese veterinary clinic New Ruipeng Pet Group (RPET), and biotechs Mineralys Therapeutics (MLYS) and Structure Therapeutics (GPCR). At month end, the IPO pipeline stood at 145 companies looking to raise over $15 billion, including 107 in the "active pipeline" that have filed or updated within the last 90 days, 19 of which are expected to raise at least $100 million.

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Private Company Watchlist
Renaissance Capital's Private Company Watchlist (PCW) stands at 232 companies. In January, one IPO came from our PCW (SKWD). We made one addition to the PCW.

Just two blank check IPOs raised $175 million in January, tech-focused Israel Acquisitions (ISRLU) and Cetus Capital Acquisition (CETUU), which plans to target businesses in Taiwan. Thirteen blank check IPOs withdrew or were declared abandoned, and there were no new filings for the first time since January 2017. Following the year-end rush in December, 15 new mergers were announced (down from 23 in December), six were completed (down from nine), and four were terminated (down from eight). As de-SPAC activity continues to decline, more SPACs are throwing in the towel and winding down operations, with 16 liquidations during the month (down from 51).

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IPO Index
The Renaissance IPO Index (IPOUSA), the underlying index for the Renaissance IPO ETF (NYSE Ticker: IPO), started off strong with a 15.8% gain in January, outperforming the S&P 500's 6.3%. The IPO Index is designed to hold a portfolio of the largest and most liquid US IPOs from the past three years, and top holdings include Airbnb, Snowflake, Coupang, Royalty Pharma, and DoorDash.

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