NEW YORK, Feb 17 (Reuters) – Is the IPO winter finally easing?
A year after Russia’s invasion of Ukraine and a rally in inflation fueled a bout of market volatility that prevented most 2022 IPOs, the past week has seen a flurry of listings. According to Dealogic data, it’s been 15 months since there was a busier week.
Five IPOs, including solar technology company Nextracker Inc’s (NXT.O) $638 million offering and Chinese sensor maker Hesai Group’s (HSAI.O) $190 million offering, closed last week. Overall, IPOs brought in about $1.17 billion, according to Dealogic, a sixfold increase from the previous week when IPOs brought in about $193 million.
IPO bankers and lawyers said that if the market thaw continues, helped by a drop in market volatility and a rise in company valuations, they expect several big companies to be waiting in the wings, including social media firm Reddit and SoftBank (9434 .T). Chipmaker Arm Holdings could start its IPOs in the second half of 2023.
“It was really encouraging to see these transactions. We see this as step one in a broader recovery in the IPO market, with some of the stronger sectors leading early supply,” said Rob Stowe, co-head of Americas equity markets at Barclays AG (BARC.L).
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According to Dealogic, IPOs excluding blank check acquisition firms raised the lowest amount of capital in more than two decades in 2022, with proceeds of $8.7 billion, compared to $154.1 billion in 2021.
Wall Street’s fear indicator, the Cboe Volatility Index (.VIX), is down nearly 12% year-to-date, suggesting reduced investor anxiety and easing the start of IPOs.
“I think we’re in a market that has at least started to open up, but is not yet open to all issuers,” said Andrew Wetenhall, co-head of equity capital markets for the Americas at Morgan Stanley (MS.N ).
Some companies are waiting for a sustained recovery in the IPO before deciding to pull the trigger for their debut, some of the advisers said. That is expected to last at least until the summer if the market recovery continues, they added.
“It could be into the summer before you start seeing a more traditional IPO calendar. It’s going to be very industry specific and thematic in this next wave (of IPOs),” said Michael Wise, vice chairman of JPMorgan (JPM.N). for equity markets.
Reporting by Echo Wang in New York; Edited by Anirban Sen and Chris Reese
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