[ad_1]
Unlock Editor’s Digest for free
FT editor Roula Khalaf has chosen her favorite stories in this weekly newsletter.
Large initial public offerings (IPOs) have outperformed the broader stock market over the past year, raising hopes that the volume of new listings may finally pick up pace again after a long period of weakness.
The stocks of companies that have raised at least $100 million in flotation since the beginning of 2023 outperformed the S&P 500 index by an average of 18 percentage points, according to a Financial Times analysis of Dealogic data.
The company’s performance was tied to several other companies, including insurance group Skyward Specialty, which has risen 125% since going public a year ago, and Raysebio, which has risen 244% following news last month that Bristol-Myers Squibb would acquire the company. supported by great success. Biotechnology company. These have more than offset the poor market reputation for groups such as grocery delivery company Instacart, which remains underperforming. On average, newly listed stocks have risen nearly 30% from their public offering price.
The data will be welcomed by deal-hungry bankers after two years of disappointing IPO numbers.
Companies raised just $20 billion in U.S. initial public offerings in 2023, according to Dealogic. This was more than double his previous year, but still a nearly 90% decrease compared to 2021. He also had the third-lowest annual total over the past decade.
Some of last year’s biggest public companies got off to a tough start, with shares of chip designer Arm, sandal maker Birkenstock and Instacart all falling below their listing prices in the weeks following their IPOs.
But the recently listed group was also the biggest beneficiary of the stock rally in the final two months of 2023, as investors became more confident that interest rates had peaked and inflation was on track to return to the Fed’s target. He was also part of the group that received this. severe recession.
“Over the past two months, we’ve had a number of data points that support that. [a] “2024 is a much more favorable outlook for IPOs,” said Jesse Mark, global head of equity capital markets at investment bank Jefferies.
Arm, the world’s largest publicly traded stock in 2023, is now up more than 40%, and even Birkenstock, which had the worst number of new entrants in history for a major IPO, fell about 15% in its first week. He has since recovered. transaction.
“We would have liked to have seen some IPOs go on an even higher trajectory out of the gate, but that’s not how we judge them,” said the head of equity capital markets at a major U.S. bank. “It’s more about where are these names going to be 30, 60, 90 days after the IPO?” [for encouraging further deals].
The Renaissance IPO Index, a market-capitalization-weighted basket of companies that went public over the past three years, is up 44% since the beginning of 2023. In comparison, the S&P 500 index rose 24% and the S&P 500 index rose 42%. Nasdaq Composite.
Recent stock price gains have already helped prompt some big-name companies to file IPO documents, including online clothing retailer Shine and bakery chain Panera, while others, including social media group Reddit, have , is resuming talks with potential investors after postponing earlier plans to go public.
Still, bank executives are wary of getting carried away after a number of false dawns, especially now that global interest rates are much higher than the ultra-low levels of a few years ago.
“We’ve laid the foundation for our 2024 enhancements, but it’s a new world, not the old world of free money,” said Greg Navan, chairman of global equity capital markets at Bank of America. It’s not similar at all.”
Despite recent earnings gains, several large companies are still languishing below their asking prices. Additionally, the stock prices of most newly listed stocks fell faster than the broader market in the first week of the new year, highlighting the potential for continued volatility.
Nabhan said investors will continue to focus on companies that can show a clear path to profitability, and for much of the decade before the 2022 market downturn, companies focused on revenue growth at all costs. This is in contrast to the previous year, when investors were often attracted to
“This is a long-term change, not a cyclical change. There is a different mindset on the part of asset managers. 1704869122”
Bankers hope funding gains will pick up momentum from the second quarter onwards, when companies will be able to submit audited full-year financial statements and the outlook for 2025 sales will become increasingly clear. There is.
However, some say that the possibility of listing in the second half of this year may be more difficult than usual due to the US presidential election in November. This is because uncertainty leading up to the vote could increase market volatility and increase the risk of an IPO. .
[ad_2]
Source link
