This spin-off from AIG is the biggest IPO of the year at just $1.8 billion as deals dry up for 2022

The US IPO market faces what could be the biggest deal of the year this week as AIG spin-off Corebridge Financial seeks to raise proceeds of up to $1.8 billion.

According to Bill Smith, co-founder and chief executive of Renaissance Capital, a provider of institutional research and IPO exchanges, if the deal goes through on this scale, it would also represent more than a quarter of its year-to-date revenue. traded funds. The stat is a sign of how dead the market was.

In comparison, the largest IPO of 2021 was Rivian Automotive Inc. RIVN, +3.62%,
which raised $12 billion to complete the largest deal since Alibaba Group Holding Ltd. went public. BABA to mark +2.62% in 2014.

As 2022 began, there were concerns that the IPO market would slow after a record 2021 amid rising inflation and higher interest rates, but few could have predicted that issuance would halt so abruptly.

“So far this year, the IPO market has been unusually quiet, caught in a ‘perfect storm’ of compounding factors – post-2021 investor fatigue, falling yields, volatility from the Ukraine war, rate hikes, recession fears,” Avery Spear said. Senior Data Analyst at Renaissance.

According to Dealogic data, 2021 saw a first-ever 1,000 IPOs, showing a record $315 billion, when that total had never before reached $200 billion in one year.

More than half of those deals were special-purpose acquisition corporations, or SPACs, as 606 blank check companies went public in 2021.

However, stock performance was subdued. According to PwC, about two-thirds of companies that went public through traditional IPOs last year traded below their asking price by the end of the year. List included Robinhood Markets Inc. HOOD, +6.18%,
Poshmark Inc. POSH, +7.35% and Bumble Inc. BMBL, +2.29%.

Those losses extended into 2022. Year to date, Robinhood is down 37%, while Poshmark is down 18% and Bumble is down 16%. This lackluster performance combined with volatile markets caused many potential issuers to hold off.

According to Renaissance data, only 59 IPOs have been rated so far in 2022, down 79.2% from the same period in 2021. Total revenue is $4.6 billion, down 95% year over year.

Source: Capital of the Renaissance

Corebridge is AIG’s AIG, a life insurance unit up +2.58%, and will go public at a valuation of $14.7 billion, according to Smith.

“JP Morgan is leading left, but there are 43 banks on the cover — the most by our count in over a decade,” Smith said in a comment.

Corebridge offers individual annuities, group annuities, life insurance and wealth management services.

“The company is profitable and has delivered solid growth, although it is subject to market movements and could be impacted by weak economic conditions,” Smith said.

Corebridge had net income of $6.4 billion on sales of $16 billion in the first half, filing documents show. The company plans to pay quarterly dividends that offer a 4.1% annual yield at the midpoint of its range, Smith said.

Only two of the deals in 2022 have raised more than $500 million, private equity firm TPG Inc. TPG -0.05% in January and healthcare firm Bausch + Lomb BLCO -0.47% in May.

TPG Raised $1.0B to Join Competitors Like Blackstone BX, +1.41%,
Apollo Global Management APO, +1.41%,
KKR & Co. Inc. KKR, +2.23% and Carlyle Group CG, +0.97% in the public markets.

Also read: TPG’s IPO: 5 Things to Know About a $9 Billion Private Equity Firm

Bausch + Lomb raised $630 million for its selling shareholder, Bausch Health Cos. BHC, -2.16%

Rounding out this week’s action are four smaller deals led by biotech Third Harmonic Bio. THRD, the company specializing in the treatment of allergic and inflammatory diseases, plans to offer 9 million shares at a price of $16-$18 a share.

Morgan Stanley, Jefferies, Cowen and Lifesci Capital underwrite the transaction. The company has applied to list on the Nasdaq under the ticker “THRD”. Proceeds will be used to fund clinical development and R&D, working capital and general corporate purposes.

Linkbancorp., which operates Pennsylvania-based The Gratz Bank, is moving from the OTC market to the Nasdaq and plans to raise up to $43 million.

Then there’s Know Labs KNW, which is developing a non-invasive glucose monitor and plans to raise $6 million.

Renaissance Capital counts two other small deals this week: China-based Lichen China LICN,
,
a financial and tax services firm expected to raise $25 million on Friday and start trading on Monday; and Israel-based Wearable Devices WLDS,
,
which aims to raise $22 million.

The Renaissance IPO ETF IPO, +1.32%, is down 42% year-to-date, while the S&P 500 SPX, +0.95%, is down 14%.